MONSTROPOLIS PRODUCTION POSSIBILITIES CURVE (PPC)…
sometimes called at production possibilities frontier.
1. Use the information from the table to create a
PPC for the city of Monstropolis. Label your points.
POINT
Scream Energy
Sushi (pounds)
(watts)
A
500
0
B
480
100
C
450
200
D
400
300
E
330
400
F
230
500
G
0
600
2. What is the opportunity cost of:
a. Increasing production of scream energy from point E to C? 200 pounds of sushi
b. Increasing production of scream energy from point F to E? 100 pounds of sushi
c. Increasing production of sushi from point A to B? 20 watts of scream energy
d. Increasing production of sushi from point C to E? 120 watts of scream energy
3. If all of Monstropolis’ resources were used for sushi production, how many pounds of sushi could be
produced? 600 pounds
4. If all of Monstropolis’ resources were used for scream energy production, how many watts of scream
energy could be produced? 500 watts scream energy
5. a. On the graph you created above, what type of opportunity cost is there? (Circle one.)
Increasing Opportunity Cost
Constant Opportunity Cost
b. How did you find your answer? The shape of the curve is actually curved.
6. a. On your graph, find the combination 630 watts of scream energy and 500 pounds of sushi. Label
that point “X” on your graph. See picture on website.
b. Based on the current production possibilities curve, is Monstropolis able to produce at point X?
Explain. Point X is impossible based on the amount of resources available.
7. On your graph, find the combination 150 watts of scream energy and 200 pounds of sushi. Label that
point “M” on your graph. See picture on website.
b. Based on the current production possibilities curve, what is happening at point M?
Explain. Point M is indicating that resources are being wasted or idle.
8. a. If all the monsters in Monstropolis went on strike, what would happen to the production
possibilities curve?
Explain. The curve will shift inward.
b. Draw the new curve on your graph in red. See picture on website.
9. a. When the monsters figure out that laughter is a better resource for producing, what would
happen to the production possibilities curve?
Explain. The curve will outward, showing economic growth.
b. Draw the new curve on your graph in blue. See picture on website.
10. a. Suppose that there is an advancement in sushi making technology, what would happen to the
PPC?
Explain. Production for sushi would increase and scream energy production would remain the
same.
b. Draw the new curve on your graph in green. See picture on website.
11. Circle and label the factors of production in the image below. See picture on website.
CIRCULAR FLOW CHART- Use your circular flow chart and textbook to help you answer the following
questions.
12. Give an example of resource owners. Resource owners are anyone that has land, labor, capital or
entrepreneurship to sell in the factor market.
13. Define a business/firm. Buys resources from the resource/factor market and then turns them into a
final good/service to sell in the product market.
14. What is the product market? A market where finals goods/services are bought and sold.
15. Give 3 examples of transactions YOU made in the product market. Answers will vary.
16. What is the factor/resource market? A market where resources (factors of production) are bought
and sold.
17. Give an example of a transaction you or your family made this month in a factor market. Answers
will vary. Parent going to work. You working.
18. How are businesses connected to factor and product markets? Firms buy factors of production in the
factor/resource market and then sell their products (final goods/services) in the product market.
19. What determines the prices of land, labor, capital and entrepreneurship in a factor market? Supply
and demand
20. Where do resource owners get the money to buy goods/services in the product market? Resource
owners sell their labor & other factors of production in the factor/resource markets.
21. Where do businesses/firms get the money to pay resources owners for their land, labor, capital and
entrepreneurship in factor markets? Firms get their money to pay for resources from selling their final
goods/services in the product market.
22. Why is it important to know that a market economy is characterized by interdependence?
Interdependence is important because people specialize and trade their production in markets for other
products they need. The circular flow of income shows the interdependence of the economy.