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Production Possibilities Frontiers

Production Possibilities Frontiers. Production Possibilities Frontier (PPF/PPC). Consumer Goods (Pizza). Capital Goods (Robots). Production Possibilities Frontier (PPF/PPC). Scarcity – unlimited wants, limited resources. Consumer Goods (Pizza). 100. Capital Goods (Robots). 50.

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Production Possibilities Frontiers

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  1. Production PossibilitiesFrontiers

  2. Production Possibilities Frontier (PPF/PPC) Consumer Goods (Pizza) Capital Goods (Robots)

  3. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources Consumer Goods (Pizza) 100 Capital Goods (Robots) 50

  4. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources Consumer Goods (Pizza) 100 Capital Goods (Robots) 50

  5. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs Consumer Goods (Pizza) 100 a b . Capital Goods (Robots) 50

  6. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs Consumer Goods (Pizza) 100 a 90 b . 50 Capital Goods (Robots) 25 45 50

  7. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs Consumer Goods (Pizza) 100 a 90 Cost = 40 pizzas b . 50 Benefit = 20 robots Capital Goods (Robots) 25 45 50

  8. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a 90 Cost = 40 pizzas b . 50 Benefit = 20 robots Capital Goods (Robots) 25 45 50

  9. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a 90 Cost = 40 pizzas c b . 50 Inefficient – unemployed resources Benefit = 20 robots Capital Goods (Robots) 25 45 50

  10. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a 90 Cost = 40 pizzas policy c b . 50 Inefficient – unemployed resources Benefit = 20 robots Capital Goods (Robots) 25 45 50

  11. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a d 90 Cost = 40 pizzas policy c b . 50 Inefficient – unemployed resources Benefit = 20 robots Capital Goods (Robots) 25 45 50

  12. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b . 50 Inefficient – unemployed resources Benefit = 20 robots Capital Goods (Robots) 25 45 50

  13. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b . 50 Inefficient – unemployed resources Benefit = 20 robots Capital Goods (Robots) 25 45 50

  14. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b . 50 Inefficient – unemployed resources Economic Growth Benefit = 20 robots Capital Goods (Robots) 25 45 50 • Economic Growth = SOL • Increased quality of human resources (EDUCATION) or technology (INVESTMENT)

  15. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) 100 Developing nation a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b U.S. 50 Inefficient – unemployed resources Economic Growth Benefit = 20 robots Capital Goods (Robots) 25 45 50 • Economic Growth = SOL • Increased quality of human resources (EDUCATION) or technology (INVESTMENT)

  16. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) NOW 100 Developing nation a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b U.S. 50 Inefficient – unemployed resources Economic Growth Benefit = 20 robots Capital Goods (Robots) 25 45 50 • Economic Growth = SOL • Increased quality of human resources (EDUCATION) or technology (INVESTMENT) FUTURE

  17. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) NOW Economic Interdependence 100 Developing nation a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b U.S. 50 Inefficient – unemployed resources Economic Growth Benefit = 20 robots Capital Goods (Robots) 25 45 50 • Economic Growth = SOL • Increased quality of human resources (EDUCATION) or technology (INVESTMENT) FUTURE

  18. Production Possibilities Frontier (PPF/PPC) • Scarcity – unlimited wants, limited resources • Opportunity costs and trade-offs • Efficiency – two kinds • Productive: producing at the least cost (any pt. on the PPF) • Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) Consumer Goods (Pizza) NOW Economic Interdependence 100 Developing nation a d Unattainable with current resources and technology 90 Cost = 40 pizzas policy c b U.S. 50 Inefficient – unemployed resources Economic Growth Benefit = 20 robots Capital Goods (Robots) 25 45 50 • Economic Growth = SOL • Increased quality of human resources (EDUCATION) or technology (INVESTMENT) Investment = purchase of capital goods FUTURE

  19. Circular Flow Diagram

  20. Consumers (Households) Producers (Businesses)

  21. Consumers (Households) A market is anything that brings together buyers and sellers Producers (Businesses)

  22. Consumers (Households) Product Market (goods/services) Producers (Businesses)

  23. Consumers (Households) Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses)

  24. Consumers (Households) Get a job! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses)

  25. Consumers (Households) Get a job! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses) Hire you!

  26. Consumers (Households) Get a job! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses) Hire you! Make stuff!

  27. Buy stuff! Consumers (Households) Get a job! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses) Hire you! Make stuff!

  28. Buy stuff! Consumers (Households) Get a job! Spend $! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Producers (Businesses) Hire you! Make stuff!

  29. Buy stuff! Consumers (Households) Get a job! Spend $! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Revenue$ Producers (Businesses) Hire you! Make stuff!

  30. Buy stuff! Consumers (Households) Get a job! Spend $! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Pay You! $ Revenue$ Producers (Businesses) Hire you! Make stuff!

  31. Buy stuff! Consumers (Households) Get a job! Get Paid! $ Spend $! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Pay You! $ Revenue$ Producers (Businesses) Hire you! Make stuff!

  32. Buy stuff! Consumers (Households) Get a job! Get Paid! $ Spend $! All parts of the circular flow diagram are dependent on all other parts! Resource Market (land, labor, capital, entrepreneurs) Product Market (goods/services) Pay You! $ Revenue$ Producers (Businesses) Hire you! Make stuff!

  33. The End

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