Name _________________________________________________________ Date_____________ Period ___________
Production Possibility Frontier Exercise
Consider the following production possibilities for South Korea. Graph these production possibilities on the figure and
connect the points to form a Production Possibilities Frontier.
List the five main assumptions of the PPF model.
1.
2.
3.
4.
5.
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PPF Basics
1. What area(s) of the production possibilities graph represents efficient feasible or obtainable output combinations?
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2. What area of the production possibilities graph represents feasible but inefficient output combinations?
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3. What part of the production possibilities graph represents currently unobtainable output combinations?
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Opportunity Cost and Production Possibility Analysis
Using the PPF you graphed in the figure above, what is the opportunity cost for wool coats (in terms of TVs per coat) for
each of the following moves:
Move
1. AtoB? __________________
2. BtoC? __________________
3. CtoD? __________________
4. DtoE? __________________
5. In this example, do opportunity costs increase as you produce more and more wool coats? __________________
6. How do increasing opportunity costs affect the shape of the PPF model? ___________________________________
Production Possibilities Analysis
Answer the following True/False questions based on this figure.
1. If the economy were restricted to PPF0, point c would represent
full employment. _______________________________
2. From PPF0, a shift in the PPF curve to PPF1 could be caused by
an underutilization in the production of TVs.
_______________________________
3. Production at point f is not feasible no matter which PPF is
applicable. _______________________________
4. If the economy moves from point a to point c on PPF0, the
necessary reduction in wool coats to produce more TVs is
referred to as opportunity costs. _______________________________
5. Devoting more resources to the production of TVs causes the
PPF to shift from PPF0 to PPF2. _______________________________
Production Possibilities Plotting and Analysis