Student Resource 3.4
Worksheet: Production Possibility Frontier Graph
Directions: The following exercise examines how to present the concept of scarcity and tradeoffs through
powerful economic tools—the production possibility frontier table and production possibility frontier
graph. Using the information from the “Survivor” exercise just completed, you will see how to organize
and present your conclusions in a way that makes them easy to understand and explain to others. After
reviewing this example, you will be given a different “Survivor”-like scenario and asked to fill out a
production possibility table and sketch a production possibility frontier graph that represents this
information.
Economists like to represent problems such as the one faced by the members of the “Survivor” tribe in
both table and graph form in order to examine the possible range of choices and the tradeoffs associated
with each choice. The production possibility table below presents in numeric form a wide range of
possible options for the survivors, starting with all resources (in this case all work hours) being committed
to just one objective: shelter. Each row in the table indicates a shift of resources toward the other
objective: food. The table helps determine if it is possible to fully achieve both objectives with the given
resources.
Before jumping into this exercise, it should be made clear that our survivors represent a very simplified
model, something economists use to explain a concept or present an idea. The result is that while it gets
the point across, it doesn’t necessarily fully reflect the way the world really works. For example, is it
realistic to think that every tribe member will work as hard as possible all 10 hours of the day? Probably
not. Also, won’t some tribe members be better at shelter building and others at food gathering? It’s likely,
and in the real world this would impact how much the tribe finished. Better, more complicated models that
account for these factors will be introduced in the next lesson. This exercise focuses on scarcity and the
choices it makes necessary.
Production Possibility Frontier Table: Shelter vs. Food
Consider what the table is telling you. The first and second columns indicate the number of hours the
group put toward each objective. The third and fourth columns show how much of the food and shelter
you get with each combination of hours put toward each objective. Right off the bat, you see that Row 1
and Row 6 have the 100% level that the survivors want. Unfortunately, 100% of one thing means 0% of
the other. So you must begin making decisions about how much food you will give up in order to get
enough shelter or vice versa. Since every combination on this table is possible, it simply becomes a
question of tradeoffs and utility; what do the survivors value more—enough food or enough shelter?
So as you can see, the table comes to the same conclusion as you and your teammates likely did: the
survivors cannot build a shelter and collect enough food with the given resources. They are constrained
by time (not enough daylight hours) and labor (not enough people to work on each task) because both of
these are scarce resources. Therefore, they have to choose what percentage of one want—food vs.
shelter—they are willing to give up in order to get some more of the other. This is what economists call a
tradeoff, and business and individuals, like our survivors, must make these decisions every day.
1. Choice 1Enough food for everyone, but risk getting wet if it rains
2. Choice 2Warm, dry shelter, but leave everyone a little hungry
3. Choice 3Somewhere in between a completed shelter and enough food
Using the numbers from the table above, economists can present the same information in graph form.
This graph tells the same story as the table and provides a visual sense of how close our survivors are to
reaching their objectives of food and shelter. Remember, they cannot have enough to eat and also have
adequate shelter because of the scarcity of some key resources, namely time and labor. Looking at the
graph, you can see the dark gray dot represents where the survivors want to be: enough food and
adequate shelter. However, as the graph also shows, the maximum they can really produce, given the
resources they have, lies along the long black line. The only way that the survivors could achieve both
adequate food and shelter (the dot at the top right of the graph) is to somehow move the line upward and
to the right.
Take a closer look at the black line. By moving upward and to the left along the line, the survivors are
getting more shelter, but less food; and by moving downward and to the right, they’re getting more food,
but less shelter. What all the points along the line have in common is this: you can’t get more food unless
you are okay with having less shelter; and you can’t build more shelter unless you’re okay with having
less food. The line therefore represents technical efficiency: along the line, you’re producing as much
as you can with means and knowhow available to you.
The dots, representing the rows from the table above, show different possible points along the black line.
Choosing some combination of food and shelter is a question of economic efficiency rather than
technical efficiency. The only way that the survivors could achieve both adequate food and shelter (the
dot at the top right of the graph) is to somehow move the line upward and to the right. And to do that, the
survivors would have to increase scarce resources, time in the day, workers, or efficiency by employing
some time or labor-saving technology.
Production Possibility Frontier Table: Water vs. Food
Now that you have seen what is and isn’t possible for the survivors from a food and shelter standpoint, it
is time to look at another scarcity issue that the group might face. Think about these same survivors.
Having finished their shelter, they now face another economic decision. It still takes them 25 hours each
day to collect enough food for the tribe. However, their closest water source has dried up, so it now takes
them 20 hours each day to collect enough water. What’s worse, one of the survivors has fallen ill and can
no longer do his part of the daily responsibilities. Using the following blank production possibility table and
graph, show both numerically and visually whether or not the tribe can collect enough water and food.
Be sure that the information in your table and graph replicates what is shown in the examples:
Production Possibility Frontier Graph: Water vs. Food
Respond to the following questions:
1. Can the tribe collect enough food and water each day?
2. Could they collect enough food and water if the sick member could work at least part of the day?
How much would he need to work?
3. Bonus Question: Where would you want the tribe to end up on this production possibility frontier
graph if you were one of the survivors? Defend your answer.