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Standard SSEF2a- Illustrate the production
possibility curve SSEF2b-Marginal Cost v. Marginal
Benefit = Rational Decision Making
Marginal Cost v. Marginal Benefit Marginal Cost-
Anything negative about an alternative/cons
Marginal Benefit – Anything positive about an alternative/pros
Marginal Cost v. Marginal Benefit People make
decisions based on costs and benefits.
The benefits must always outweigh the costs.
When rational decisions occur, marginal benefit outweighs marginal cost. ******
Production Possibility Curves (PPC)The Curve illustrates opportunity
cost It graphically depicts the trade-offs
we make
Production Possibility Curve*Measures the maximum amount
of output that can be achieved from any given input.
Output- the result of an activity Input- what you put in to receive
an output
Copy this in your notes:
Production Possibility Curves
Any point ON or INSIDE the curve is a possible production combination
Fully Employed Resources All points on
the curve represent the maximum combinations of output is all resources are fully employed
Production Possibility Curves
As long as some resources are idle, the country cannot produce to its full potential. This is represented by points inside the curve.
Moving the Curve You can move the curve outward when
output increases Ways to increase output:
1. New technology2. More resources
Figuring out Opportunity Cost
What you could have produced vs. what you are producing now
It’s what you give up to produce more of a given product.
Figuring out Opportunity Cost
If this economy decides to increase
production of GUNS from 30 to 60, what is the
opportunity cost in terms of BUTTER?
PPC 1. What do points A,B, and E represent?
2. What does point C represent?
3. Can I produce at point D?
4. What is my opportunity cost if I produce at point A instead of point E ?