Production Possibilities Curve draws the production possibilities curve (PPC), also called the production possibilities frontier (PPF), between two goods, like consumer goods and capital goods: bowed out for increasing opportunity cost, straight for constant opportunity cost, or bowed in. Mark points on, inside and outside the curve as efficient, inefficient and unattainable, shift the curve outward for economic growth or inward after a disaster, pivot it when only one good can be made more of, and step down it to show the opportunity cost of each move. For comparative advantage, draw two countries’ straight-line curves on one graph or side by side, with where each meets the axes written there.
Teachers use it for economics questions on tests, worksheets and slides. Start from a common setup like economic growth or comparative advantage, name the two goods, and keep the graph schematic, with no numbers, as AP graphs are drawn, or number it so students can read off opportunity costs. Leave the point captions, point names and the curve’s label as blank lines for students to fill in, and print in color or black and white.
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What do points inside, on and outside a production possibilities curve mean?
A point on the curve is efficient: the economy is using all of its resources fully to make that mix of the two goods. A point inside the curve is inefficient, with resources unemployed or underused, as in a recession. A point outside it is unattainable with the resources and technology the economy has now. Under Points, put each point On the curve, Inside the curve or Outside the curve, and give it the caption Efficient, Inefficient or Unattainable, or your own words.
Why is the production possibilities curve bowed out?
Because of increasing opportunity cost. Resources are not equally good at making both goods, so as an economy makes more of one good it has to move resources that are less and less suited to it, giving up more and more of the other good for each extra unit. When resources are equally suited to both goods, the opportunity cost stays the same and the curve is a straight line. Under Shape, choose Bowed out, Straight or Bowed in, and under Opportunity cost tick Steps between the points on the curve to show what each move along it gives up.
How do you show economic growth on a production possibilities curve?
Economic growth shifts the whole curve outward: more resources, like a larger labor force or more capital, or better technology let the economy make more of both goods. A war or natural disaster that destroys resources shifts it inward, and a new technology that helps make only one good pivots the curve out along that good’s axis alone. Under Shift, choose what shifts (the whole curve, or only one good, a pivot), Outward (growth) or Inward, how far and how many arrows. The curves are labeled PPC₁ and PPC₂, and a point can go On the new curve.
How do you calculate opportunity cost from a production possibilities curve?
The opportunity cost of one good is how much of the other good is given up to make it: if making 25 more consumer goods means making 10 fewer capital goods, each consumer good costs 10 ÷ 25 = 0.4 capital goods. On a bowed-out curve that cost grows with each step along it; on a straight curve it stays the same. Choose Numbered under Axes, type the most of each good the economy can make, put points on the curve and tick Steps between the points on the curve: each step is drawn with dashed lines and what it gives up and gains written beside it, and the page lists each step’s opportunity cost.
How do you find comparative advantage from two countries’ production possibilities curves?
A country has a comparative advantage in the good it makes at the lower opportunity cost, and an absolute advantage in a good it can make more of. If Country A can make 40 wheat or 20 cloth, each wheat costs it 0.5 cloth; if Country B can make 30 of either, each wheat costs it 1 cloth, so A has the comparative advantage in wheat and B in cloth, and both gain by specializing and trading. Under Countries, choose Two, one graph or Two, side by side, then name the countries and type the most of each good each can make. The numbers are written where each line meets the axes, and the page gives each country’s opportunity cost of each good.
How do I make a PPC worksheet where students label the points?
Give the points captions, then under Labels set Captions to Blank lines: each caption becomes a blank line with an arrow to its point, for students to write efficient, inefficient or unattainable. Set the curve’s label to Blank line too, or choose Blank lines beside Every label to blank the curve’s name, the point names and the captions at once. The Students label the points (blank labels) setup starts one for you, and Black and white under Look prints cleanly on a photocopier.
Can the production possibilities curve have numbers on the axes?
Yes. Graphs start schematic, with no numbers, the way AP graphs are drawn. Choose Numbered under Axes and type where the curve meets each axis, the most of each good the economy can make; points on the curve are then placed by how much of the x-axis good they make, and a point can also go At numbers typed, to ask whether a mix is attainable. The axes fit the figure, or can be set by hand under Numbers, with gridlines.
Econ Figures Production Possibilities Curve