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Production Possibilities Curve.notebook
1
August 07, 2015
Sep 36:54 PM
Warm Up:
Follow the instructions on the handout.
and/or
Sep 36:57 PM
We face scarcity!
Aug 294:23 PM
1) Wants are unlimited.
2) Resources are limited and fall into four categories: Land,
Labor, Capital goods, and Entrepreneurship
3) There is a need to make decisions on how to allocate scarce
resources.
4) Decisions lead to opportunity costs.
5) These costs are illustrated diagrammatically on a Production
Possibilities Curve.
Aug 3011:41 AM
Resource Strip Activity
Possibilities
Number of SquaresNumber of Triangles
Opportunity Cost per Square (# Triangles)
A
B
C
D
E
F
Aug 3011:48 AM
1
2
3
4
5
6
7
8
9
10
Num
ber o
f Triangles
1 2 3 4 5Number of Squares
Feb 158:53 PM
Key Idea:
What is the Production Possibilities Curve showing us?
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Production Possibilities Curve.notebook
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August 07, 2015
Aug 293:52 PM
Production Possibilities Curve
Guns
Butter
Aug 294:25 PM
Arm
y Trucks
2
4
6
8
10
12
1 2 3
AB
C
E
F
D
Cars
Aug 3011:58 AM
Closing:Assume that one society produces two kinds of goods
(watches and doughnuts) using all its resources. If the society
decides to increase the production of watches, what must happen?
Explain in terms of a Production Possibilities Curve.
Feb 159:13 PM
Warm Up:
What economic concepts can you see on a production possibilities
curve?
Good A
Good B
Aug 294:36 PM
Production Possibilities Practice
Aug 3111:46 AM
0
2
4
6
8
10
12
1 2 3 4 5 6
Good B
Good A
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Production Possibilities Curve.notebook
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August 07, 2015
Aug 3111:49 AM
Good A
Good B
Aug 3111:04 AM
Closing:
Socrative Exit Ticket Questions
Feb 159:36 PM
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Attachments
Triangles and Squares.pdf
AP Production Possibilities Practice.pdf
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LESSON FIVE
From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY 33
SCARCITY ANDCHOICEby Liudmila Guinkel (Russia)
LESSON DESCRIPTIONIn this lesson, students participate in a
role
play as producers of two goods, allowingstudents to experience
scarcity. They makechoices about using their scarce resource
toproduce both or one of two goods. Then theyconstruct
production-possibilities curves,compute opportunity costs, and
conclude thatscarcity requires choice and every choice has
anopportunity cost.
AGE LEVEL15-18 years old
CONCEPTSscarcityproductive resourcesopportunity cost
CONTENT STANDARDSProductive resources are limited. Therefore
people cannot have all the goods and servicesthey want; as a
result, they must choose somethings and give up others.
BENCHMARKSScarcity is the condition of not being able to
have all of the goods and services one wants. Itexists because
human wants for goods andservices exceed the quantity of goods
andservices that can be produced using all availableresources.
Like individuals, governments and societiesexperience scarcity
because human wantsexceed what can be made from all
availableresources.
People make choices because they cannothave everything they
want.
Whenever a choice is made, something isgiven up.
OBJECTIVES♦ Students will define scarcity and
opportunity cost.♦ Students will identify the opportunity
cost of producing one good in terms of what isgiven up.
♦ Students will explain production-possibilities analysis.
TIME REQUIREDOne to two class periods
MATERIALS• Copies of Activities 1 – 4 for each student•
Transparencies of Activities 2 - 4• Scissors and glue
PROCEDURE1. Tell students that they will become
producers. Point out that producers needresources to produce
goods or provide services.
2. Give a copy of Activity 1, glue, and apair of scissors to
each student. Point out thateach student has the same resources to
producesquares and/or triangles. Read the instructionstogether and
answer any questions. Allow a fewminutes for students to make their
squaresand/or triangles.
3. Distribute a copy of Activity 2 to eachstudent. Display a
transparency of Activity 2. Point out that the table is labeled
“production-possibilities schedule” because it will show allthe
possibilities that each student could haveproduced. Tell students
to complete their tablesas you work on the transparency. Discuss
thefollowing.
A. Did anyone produce only triangles? How many squares were you
able toproduce? (zero) In the row for
-
LESSON FIVE
34 From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY
Possibility A, enter “10” for the numberof triangles and “0” for
squares.
B. Did anyone produce eight triangles? How many squares were you
able toproduce? (one) In the row forPossibility B, enter “8” for
the numberof triangles and “1” for squares.
C. Did anyone produce six triangles? Howmany squares were you
able to produce? (two) In the row for Possibility C, enter“6” for
the number of triangles and “2”for squares.
D. Did anyone produce four triangles? How many squares were you
able toproduce? (three) In the row forPossibility D, enter “4” for
the numberof triangles and “3” for squares.
E. Did anyone produce two triangles? Howmany squares were you
able to produce? (four) In the row for Possibility E, enter“2” for
the number of triangles and “4”for squares.
F. Did anyone produce only squares? Howmany triangles did you
produce? (zero) In the row for Possibility F, enter “0” forthe
number of triangles and “5” fortriangles.
Answers for Activity 2 table
PossibilitiesNumber
ofSquares
Numberof
Triangles
OpportunityCost perSquare
A 0 10 ―B 1 8 2C 2 6 2D 3 4 2E 4 2 2F 5 0 2
4. Point out that the table represents theproduction
alternatives that are possible, hencethe name
production-possibilities schedule. Although each alternative was
possible, eachstudent could produce only one alternative giventhe
limited resources.
5. Explain that students are experiencingthe basic economic
problem in this activity –scarcity. Define scarcity as the
condition of notbeing able to have all of the goods and servicesone
wants. It exists because human wants forgoods and services exceed
the quantity of goodsand services that can be produced using
allavailable resources.
6. Have students identify scarce resourcesused to produce
squares and triangles. (students, scissors, glue, resource strips,
tables,classroom, electricity, and so on)
7. Explain that scarcity of resourcesnecessitates decision
making. Remind studentsthat they could choose only one
alternativeamong all possibilities. Once a productionalternative is
selected another alternative cannotbe selected because the
available resources arelimited.
8. Point out that whenever someone makesa personal decision to
use limited resources (i.e.,an economic choice), an opportunity
cost isincurred. Opportunity cost is the highestvalued alternative
that must be foregone becauseanother option is chosen.
9. Ask students to identify the opportunitycost of producing the
first square. (Twotriangles must be given up.) Enter “2” in
thefourth column in the row for Possibility B. Have students
compute the opportunity cost ofproducing each additional square.
(Theopportunity cost of getting an additional squarein terms of
sacrificed triangles is always thesame –two triangles.)
10. Tell students to plot the productionpossibilities on the
graph on Activity 2, labelingeach point. Tell them to connect the
points. Point out that the resulting line is called
aproduction-possibilities curve – a graphicalrepresentation of the
production possibilities.
11. Display Visual 1 and explain that thepoints on the curve
represent combinations of
-
LESSON FIVE
From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY 35
the two goods that are possible. Discuss thefollowing.
A. What does a producer gain by producingpoint C instead of
point B? (one square)
B. What is the opportunity cost ofproducing point C instead of
point B? (two triangles)
C. What does a producer gain by producingpoint D instead of
point E? (twotriangles)
D. What is the opportunity cost ofproducing point D instead of
point E? (one square)
E. How many squares and triangles arerepresented by point I?
(one square andfour triangles)
Note to teacher: Production-possibilitiescurves may be straight
or curved (bowed-outward) lines. A straight line has
constantopportunity costs. A bowed-outward lineshows increasing
opportunity costs as moreof one good is produced.
12. Explain that the production-possibilitiescurve represents a
limit on the alternatives thatcan be produced because of scarce
resources –each producer has only one resource strip.
13. Have students compare points C and Oand then compare points
I and D. (Point Crepresents six triangles and two squares, andpoint
O represents the same amount of trianglesand three squares. Point I
represents fourtriangles and one square, and point Drepresents the
same amount of triangles andthree squares.) Discuss the
following.
A. Why can any producer produce point C? (Each producer has
enough resources.)
B. If a producer produced possibility C,would the producer use
all resourcesavailable? (Yes.)
C. Would combination O be preferable tocombination C? (Yes
because morewants could be satisfied.)
D. Why can’t any producer produce thecombination of triangles
and squaresrepresented by point O? (There aren’tenough
resources.)
E. Can any producer choose to produceeither point I or point D?
(Yes, they arepossible.)
F. Why would point I be a less preferredchoice than point D?
(Resources arewasted. The producer is not getting asmuch as
possible from the availableresources. It is inefficient.)
G. How might a producer be able toproduce point O? (if the
producer gotimproved technology or more resources)
14. Point out that a production-possibilitiesschedule or table
shows the maximumcombinations of the two goods that can beproduced,
assuming a given state of technologyand a given amount of
resources. All points arepossible, but only one may be chosen, just
asstudents could only choose one combination oftriangles and
squares.
15. Explain that societies experience scarcityas well as
individuals. Every economy has alimited amount of resources and
must makedecisions about what to produce.
CLOSUREReview the main points of the lesson.
1. What is scarcity? (the condition of notbeing able to have all
of the goods and servicesone wants)
2. Why does scarcity exist? (Human wantsfor goods and services
exceed the quantity ofgoods and services that can be produced
usingall available resources.)
3. What is opportunity cost? (the highestvalued alternative that
must be foregonebecause another option is chosen)
4. What was the opportunity cost of anadditional square in this
lesson? (two triangles)
-
LESSON FIVE
36 From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY
5. Why do choices have an opportunitycost? (People must give up
some desirablethings in order to have more of other thingsbecause
of limited resources.)
ASSESSMENT1. Assume that one society produces two kinds
of goods (watches and doughnuts) using allits resources. If the
society decides toincrease the production of doughnuts, thenthe
production of watches:a. Can be increased.b. Must be reduced. *c.
Must remain the same.
Use the following production-possibilitiesschedule to answer the
following questions.
Cakes(in thousands)
Bicycles(in hundreds)
0123
151390
2. What is the opportunity cost of producingthe first one
thousand cakes?a. 200 bicycles *b. 500 bicyclesc. 900 bicyclesd.
1500 bicycles
3. Which of the following combinations ofproducing cakes and
bicycles is impossible?a. 1000 cakes and 1000 bicyclesb. 2000 cakes
and 1300 bicycles *c. 2000 cakes and 500 bicyclesd. 2000 cakes and
800 bicycles
EXTENSIONProvide the following table to students.
PossibilitiesNumber
ofSquares
Numberof
Triangles
OpportunityCost perSquare
A 0 12 ―B 1 10C 2 8D 3 6E 4 4F 5 0
Tell students to plot the new production-possibilities curve on
Activity 2. Have studentsprovide possible causes for a shift in the
curve. (increase in resources, improved technology)
-
LESSON FIVE
From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY 37
Activity 1Resource Strips
Instructions
Cut out the entire table on theoutside.
Fold the table along the dashedline.
Glue the two sides together, lineson the outside.
Cut out squares and/or triangles –your choice.
-
LESSON FIVE
38 From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY
Activity 2All the Possibilities
Production-Possibilities Schedule
Possibilities Number ofSquaresNumber ofTriangles
OpportunityCost per Square
(# triangles)A ―BCDEF
Production-Possibilities Curve
10987654321
0 1 2 3 4 5
Number ofTriangles
Number ofSquares
-
LESSON FIVE
From Old MacDonald to Uncle Sam, National Council on Economic
Education, New York, NY 39
Visual 1Production-Possibilities Curve
Production-Possibilities Curve
A
B
C O
I D
E
10987654321
F0 1 2 3 4 5
Number ofTriangles
Number ofSquares
SMART Notebook
-
1 Microeconomics LESSON 2 � ACTIVITY 2UNIT
Advanced Placement Economics Microeconomics: Student Activities
© National Council on Economic Education, New York, N.Y. 7
Scarcity necessitates choice. Consuming or producing more of one
thing means consuming or pro-
ducing less of something else. The opportunity cost of using
scarce resources for one thing instead of
something else is often represented in graphical form as a
production possibilities curve.
Part A
Use Figures 2.1 and 2.2 to answer these questions. Write the
correct answer on the answer blanks, or
underline the correct answer in parentheses.
1. If the economy represented by Figure 2.1 is presently
producing 12 units of Good B and zero units
of Good A:
(A) The opportunity cost of increasing production of Good A from
zero units to one unit is the
loss of _______ unit(s) of Good B.
(B) The opportunity cost of increasing production of Good A from
one unit to two units is the
loss of _______ unit(s) of Good B.
(C) The opportunity cost of increasing production of Good A from
two units to three units is the
loss of _______ unit(s) of Good B.
(D) This is an example of (constant / increasing / decreasing /
zero) opportunity cost per unit for
Good A.
Scarcity, Opportunity Cost and Production Possibilities
Curves
Adapted from Phillip Saunders, Introduction to Microeconomics:
Student Workbook, 18th ed. (Bloomington, Ind., 1998). Copyright
©1998 Phillip Saunders. All rights reserved.
10
12
210 3GOOD A
GO
OD
B
4 5 6
6
8
2
4
Figure 2.1
Production Possibilities Curve 1
-
8 Advanced Placement Economics Microeconomics: Student
Activities © National Council on Economic Education, New York,
N.Y.
1
2. If the economy represented in Figure 2.2 is presently
producing 12 units of Good B and zero units
of Good A:
(A) The opportunity cost of increasing production of Good A from
zero units to one unit is the
loss of _______ unit(s) of Good B.
(B) The opportunity cost of increasing production of Good A from
one unit to two units is the
loss of _______ unit(s) of Good B.
(C) The opportunity cost of increasing production of Good A from
two units to three units is the
loss of ________ unit(s) of Good B.
(D) This is an example of (constant / increasing / decreasing /
zero) opportunity cost per unit for
Good A.
Microeconomics LESSON 2 � ACTIVITY 2 (continued)UNIT
10
12
10GOOD A
GO
OD
B
2 3
6
8
2
4
Figure 2.2
Production Possibilities Curve 2
-
Advanced Placement Economics Microeconomics: Student Activities
© National Council on Economic Education, New York, N.Y. 9
1
Part B
Use the axes in Figures 2.3, 2.4 and 2.5 to draw the type of
curve that illustrates the label above each
axis.
Microeconomics LESSON 2 � ACTIVITY 2 (continued)UNIT
GOOD A
Increasing opportunity cost per unit
of Good B
GO
OD
B
Figure 2.3
Production Possibilities Curve 3
GO
OD
B
GOOD A
Zero opportunity cost per unit
of Good B
Figure 2.4
Production Possibilities Curve 4
GOOD A
Constant opportunity cost per unit
of Good B
GO
OD
B
Figure 2.5
Production Possibilities Curve 5
-
10 Advanced Placement Economics Microeconomics: Student
Activities © National Council on Economic Education, New York,
N.Y.
1
Part C
Use Figure 2.6 to answer the next five questions. Each question
starts with Curve BB' as a country’s
production possibilities curve.
3. Suppose there is a major technological breakthrough in the
consumer-goods industry, and the
new technology is widely adopted. Which curve in the diagram
would represent the new produc-
tion possibilities curve? (Indicate the curve you choose with
two letters.) __________
4. Suppose a new government comes into power and forbids the use
of automated machinery and
modern production techniques in all industries. Which curve in
the diagram would represent the
new production possibilities curve? (Indicate the curve you
choose with two letters.) __________
5. Suppose massive new sources of oil and coal are found within
the economy, and there are major
technological innovations in both industries. Which curve in the
diagram would represent the
new production possibilities curve? (Indicate the curve you
choose with two letters.) __________
6. If BB' represents a country’s current production
possibilities curve, what can you say about a point
like X? (Write a brief statement.)
7. If BB' represents a country’s current production
possibilities curve, what can you say about a point
like Y? (Write a brief statement.)
Microeconomics LESSON 2 � ACTIVITY 2 (continued)UNIT
B
C
A´CONSUMER GOODS
CA
PIT
AL
GO
OD
S
B´ D´ C´
A
Y
X
Figure 2.6
Production Possibilities Curve: Capital Goods and Consumer
Goods
-
Advanced Placement Economics Microeconomics: Student Activities
© National Council on Economic Education, New York, N.Y. 11
1
Part D
Use Figure 2.7 to answer the next three questions.
8. What change could cause the production possibilities curve to
shift from the original curve (XX')
to the new curve (YY')?
9. Under what conditions might an economy be operating at Point
Z?
10. Why might a government implement policy to move the economy
from Point B to Point A?
Microeconomics LESSON 2 � ACTIVITY 2 (continued)UNIT
X
Y
CONSUMER GOODS
CA
PIT
AL
GO
OD
S
X´ Y´
Z
A
B
Figure 2.7
Production Possibilities Curve: Capital Goods and Consumer
Goods
SMART Notebook
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