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--"IGCSE ECONOMICS REVISITED!"--
--1.5.1 NATURE/MEANING OF THE PPC--
--1.5.1 NATURE/MEANING OF THE PPC--
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"The 'PRODUCTION POSSIBILITY CURVE (PPC)' also known as the PRODUCTION POSSIBILITY FRONTIER (PPF), is an economic model used to illustrate the economic concepts of FACTORS OF PRODUCTION, SCARCITY, CHOICE, and OPPORTUNITY COST."
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"This model condenses the output of an entire economy into two categories (e.g., capital vs. consumer goods) and then plots the various combinations that the economy can produce given its LIMITED FIXED STOCK OF RESOURCES within a chosen time period. It clearly illustrates 'choice,' 'trade-offs,' and 'opportunity costs.'
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"Let's start with imagining the economy can produce either 🍏 or 🍓 and use a time period of 'per day'..."
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('Insert image of labeled axis')
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"We can start with determining the maximum output that could be produced if 100% of the resources (in this example, 10 laborers) were devoted to the production of each of the goods; in this case, we have either 100 🍏 or 100 🍓 per hour."
('Insert image of axis with extremes)
--1.5.2 CONSTANT & INCREASING OPPORTUNITY COST--
--1.5.2 CONSTANT & INCREASING OPPORTUNITY COST--
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"So what about the other 'trade-off combinations' between these two maximums?"
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"If you give up/forgo 🍏, how many additional 🍓 can you produce, and vice versa?" "Well, if the trade-off between the two goods is 'constant,' at say 'one for one', then what would the PPC look like?"
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"Correct! It's a 'straight line' with a 'gradient of one,' 100/100; in other words, the trade-off (aka the opportunity cost) is CONSTANT, for every additional +1 🍏, we forgo a -1 🍓, and vice versa."
('Insert constant returns ppc')
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"But for this to be the case, 'CLONING' 😶😶😶😶😶😶 would need to be legal as all the workers MUST be equally suitable for producing both products, and the opportunity costs would be identical like the table below."
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"...in other words the assumption that creates the constant straight PPC is not realistic, as not all resources/workers are the same in terms of productivity ('imperfect factor mobility')."
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('Insert image of labour in a row tallest to shortest')
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"If we assume that 'HEIGHT' has the biggest influence on the relative productivity of each labour resource, with taller people being more suitable for 🍏-picking and shorter people being more suitable for 🍓-picking you should realise that with impefect factor mobility we will employ better 🍏 pickers, to pick 🍓 and vice versa.
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"...and in terms of opportunity cost, when we employ taller and taller workers to pick 🍓 what do you think happens to the opportunity cost in terms of 🍏?"
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"That's right, it INCREASES, in other words there exists INCREASING OPPORTUNITY COSTS."
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"So what does this do to the shape of the PPC?"
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--TASK--
"Below is a table showing the productivities of workers with different heights and corresponding productivity levels. Now, using graph paper plot the PPC and explain the shape in terms of increasing opportunity cost!"
--1.5.3 SHIFTS IN THE PPC: CAUSES--
--1.5.3 SHIFTS IN THE PPC: CAUSES--
--1.5.4 POSITIONS WITHIN THE PPC--
--1.5.4 POSITIONS WITHIN THE PPC--
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