Production Possibilities Graphs

1
Daily Warm up Activity (HOT Section Notes) We
have a Free Market Economy in the United States.
What are some advantages of this kind of economy?
We. However, do not have an unregulated free
market system. What restraints/regulations are
put in place to regulate trade?
2
Economics Mr. Kirby Clackamas High School Unit 1
Lesson 4
3
Unit One Learning Objectives

• North Clackamas School District Social Studies
  Priority Standards
• Econ 53. Describe characteristics of command,
  market, traditional, and mixed economies and how
  they affect jobs and standards of living.
• Econ 59. Demonstrate the skills and dispositions
  needed to be a critical consumer of information.

4
Lesson Two Daily Learning Target

• I Can define and explain in writing the
• following key Economic concepts
• Production Possibilities Graph
• Efficiency
• Underutilization

5
Producers have options. Should a farmer grow
corn or broccoli?
6
A Production Possibilities Graph

• A Production Possibilities Graph shows
  alternative ways of using a countrys or
  producers resources.
• If a farmer uses more of his land to grow corn,
  he has less land for broccoli.
• Every decision has its cost.

7
What is the cost of producing more automobiles?
8
Efficiency

• An economy is efficient when it uses resources in
  such a way as to maximize production.
• Why is it important to be efficient?

9
Look at the graph. Where is efficiency occurring?
10
Look at this graph. Where is efficiency occurring
?
11
Underutilization

• Underutilization is the opposite of efficiency.
• Underutilization occurs when an economy uses
  fewer resources than it is capable of using.
• Why do producers avoid the underutilization of
  resources?

12
Look at the graph. Where is underutilization
occurring?
13
The Production Possibilities Frontier

• The line on the graph that shows the maximum
  possible production is called the production
  possibilities frontier.
• At the frontier, efficiency is occurring.
• However, new technology can shift the frontier.
  Think about it!

14
Look at the graph. Where is the production
possibilities frontier?
15
Dont Forget Scarcity!

• A producer cannot produce everything.
• A producer must make choices.
• Remember Its all about scarcity. Our
  resources are limited but our wants and desires
  are unlimited.

16
Its all about corn or broccoli. We cant have it
all.
17
Questions for Reflection

• What does a production possibilities graph show?
• Define efficiency.
• Why is it important to be efficient?
• Define underutilization.
• What problems are created by underutilization?
• What is the production possibilities frontier?

18
Use the following information to create a PPC for
McDonalds during Lunch hour. Biff and Skip,
working at maximum efficiency can produce the
following two products
Big Macs 0 5 10 15 Plot a point showing Underutilization. 2. Plot a point showing future production possibilities. Large Fries 25 15 5 0
19
Problem Solving Activity 3 Create two PPCs
A. For Under Armor Football cleats 25/0 Socks 100/0 For Starbucks Grande Mocha w/whip 10/0 Black Coffee (house blend) 18/0
20
Partner Practice-Econ Book

• Complete the Chapter One Assessment with
  partner.
• Answer questions 1-9 on page 20.
• Turn your answers into me.
• One paper per group of two.