Application 5C pg. 12 - 14

Question 1

Define and describe a production possibilities curve (PPC)

Answer 1

> used to explain the concepts of choice, scarcity, and opportunity
useful way of visualizing choices a society makes between two different goods

Question 2

Describe the points inside the production possibilities curve (PPC)

Answer 2

The points inside the curve are possible combinations, but they are not efficient ones because resources are being wasted.

Question 3

Describe the points outside the production possibilities curve (PPC)

Answer 3

Points outside the curve are not possible because of the limits of resources and technology.

Question 4

Describe the shift outward on a production possibilities curve (PPC)

Answer 4

The shift outward portrays an expanding economy.

Question 5

Describe the shift inward of a production possibilities curve (PPC)

Answer 5

A shift inward of the PPC indicates an economy that is retracting, such as during a recession.
>more that one product is produced, giving up the other product becomes more and more beneficial

Question 6

What does the production possibilities curve (PPC) illustrate?

Answer 6

The PPC illustrates the concept of opportunity cost.

Question 7

Explain the law of increasing costs

Answer 7

“The opportunity cost of one product increases the more that the other is produced.”

> The PPC usually bends outward because of the law of increasing costs.

Question 8

Describe the straight-line relationship of the production possibilities curve (PPC)

Answer 8

The straight-line relationshipj is true because the resources to grow green pole beans are identical to the resources needed to grow yellow wax beans.
>Changing from one crop to the other utilizes the same worker skills, equipment, and farmland.
>results because the output of green pole beans is directly proportional to the output of yellow wax beans
>the PPC would be a straight line because of the linear exchange of products