E.1.9.



=Use a production possibilities curve to explain the concepts of choice, scarcity, opportunity cost, tradeoffs, unemployment, productivity and growth=

//Focus Question: How does a production possibilities curve explain economic concepts?//
[|Production Possibilities Curve PowerPoint]

A **production possibilities curve** is a graph showing two goods a given economy can produce, and the potential the economy has to maximize the production of both products, given the technology and resources available.

Click[| here] to visit a website that walks you through an example of a Production Possibilities curve, also known as a Production Possibility Frontier.


 * Opportunity Cost** is the benefits that would arise from not undertaking the action in question. This helps determine the pros and cons of the production method being explored.
 * Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it.
 * The opportunity cost is what you most forego in order to get something


 * Productivity** is a unit to show the output per input of a given product. The production possibilities curve, when achieved to the fullest shows that the productivity has been maximized.


 * Choice** is the choosing between the different uses of scarce resources. When these uses are maximized the healthy curve is shown.


 * Unemployment** is a state of being without a job, while at the same time being unretired. Again, when the curve is achieved, the unemployment is decreased because all the resources (including workers) have been maximized.


 * Scarcity** occurs when the consumer demand is higher than the availability. This affects the curve because the potential of the curve is not being fully realized.


 * Growth** is a measure of economic expansion. Growth is shown when the possibilites curve moves outward, meaning that the possibilites for economic growth are increased.


 * Tradeoffs** are measured economically by opportunity cost. As mentioned before, the opportunity cost regards the benefits that would arise from not undertaking an action. When the action is undertaken, the lost benefits of the opportunity cost are known as a tradeoff. Tradeoffs can also help decide the pros and cons that determine the production graph.

[|Here]is a link to a Khan Academy video on Production Possibility Curves. Then [|here] for a continuation of the scenario in regards to Opportunity Cost.

**Lesson Plan:** Here is a 90 minute long [|lesson plan] from the Federal Reserve Bank of St.Louis

If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then if we increase the production of shel ter along the PPC, which of the f ollowing is true?
 * Quiz Question**:

A. We also increase the production of food. B. We must decrease the production of food. This foregone food production represents the opportunity cost of the increase in shelter. C. We cannot change the production of food. D. None of the above Answer: B Source: https://www.proprofs.com/discuss/q/139315/economy-can-produce-various-combinations-food-and-shelter-al

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=production+possibilities+curve __ http://tutor2u.net/economics/gcse/revision_notes/basics_choice_opportunity_cost.htm __ http://www.investopedia.com/terms/p/productivity.asp http://www.investopedia.com/terms/s/scarcity.asp http://en.wikipedia.org/wiki/Trade-off