Worksheet: Production Possibility Frontiers
Part A: Graphing PPFs
Use the following production possibility curves to answer the questions 1 through 4 for
each curve. (Note that production possibility curve 3 is not realistic, but it serves to support a
“what if” thought exercise.
Production Possibility Frontier 1
Good B
12
10
8
6
4
2
0
1
2
3
4
5
6
Good A
If this economy is presently producing 12 units of Good B and 0 units of Good A:
1. The per­unit opportunity cost of increasing production of Good A from 0 units to 1 unit is the
loss of _______ unit(s) of Good B.
2. The per­unit opportunity cost of increasing production of Good A from 1 unit to 2 units is the
loss of _______ unit(s) of Good B.
3. The per­unit opportunity cost of increasing production of Good A from 2 units to 3 units is the
loss of _______ unit(s) of Good B.
4. This is an example of (constant / increasing / decreasing / zero) per­unit opportunity cost for
Good A.
Production Possibility Frontier 2
Good B
12
11
10
8
6
4
2
0
1
2
3
Good A
If this economy is presently producing 12 units of Good B and 0 units of Good A:
1. The per­unit opportunity cost of increasing production of Good A from 0 units to 1 unit is the
loss of _______ unit(s) of Good B.
2. The per­unit opportunity cost of increasing production of Good A from 1 unit to 2 units is the
loss of _______ unit(s) of Good B.
3. The per­unit opportunity cost of increasing production of Good A from 2 units to 3 units is the
loss of _______ unit(s) of Good B.
4. This is an example of (constant / increasing / decreasing / zero) per­unit opportunity cost for
Good A.
2
Production Possibility Frontier 3
Good B
12
10
8
6
4
2
0
1
2
3
4
5
6
Good A
If this economy is presently producing 12 units of Good B and 0 units of Good A:
1. The per­unit opportunity cost of increasing production of Good A from 0 units to 1 unit is the
loss of _______ unit(s) of Good B.
2. The per­unit opportunity cost of increasing production of Good A from 1 unit to 2 units is the
loss of _______ unit(s) of Good B.
3. The per­unit opportunity cost of increasing production of Good A from 2 units to 3 units is the
loss of _______ unit(s) of Good B.
4. This is an example of (constant / increasing / decreasing / zero) per­unit opportunity cost for
Good A.
3
Part B: PPF Shapes
Use the following axes for production possibility curves 4, 5, and 6 to draw in the type of
curve that illustrates the labels given below the respective axes.
Curve 4
Curve 5
Good B
Good B
Good A
Good A
Increasing Opportunity
Costs per unit for Good B
Zero Opportunity
Costs per unit for Good B
(Good B is a free Good)
Curve 6
Good B
Good A
Constant Opportunity
Cost per unit for Good B
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Part C: Moving the PPF
Note the following production possibility diagram and use it to answer each of the
questions below. Each question starts with curve BB’ as a country’s production possibility curve.
Capital Goods
C
B
x
y
A
A’
B’
D’
C’
Consumer Goods
1. Suppose massive new sources of oil and coal are found within the economy and there are
major technological innovations in both sectors of the economy. Which curve in the diagram
would represent the new production possibility curve? (Indicate the curve you choose with two
letters.) __________
2. Suppose that a new government comes into power that forbids the use of automated
machinery and modern production techniques in all industries. Which curve in the diagram would
represent the new production possibility curve? (Indicate the curve you choose with two letters.)
__________
3. Suppose there is a major technological breakthrough in the consumer goods industry, and the
new technology is widely adopted. Which curve in the diagram would represent the new
production possibilities curve? (Indicate the curve you choose with two letters.) _________
4. If BB’ represents a country’s current production possibilities frontier, what can you say about
a point like x? (Write a brief statement.)
5. If BB’ represents a country’s current production possibility frontier, what can you say about a
point like y? (Write a brief statement.)
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