PPF

1. Production Possibilities Frontier Increasing Opportunity Costs Wheat Rice 0 Wheat Rice “ Some resources are not easily adaptable to alternative uses” 80 78 70 55 38 0 0 20 40 60 80 100 80 70 60 50 40 20 10 10 20 30 40 50 60 70 80 90 100 . . . . . . -2 -8 -15 -17 -38 +20

2. Production Possibilities Frontier Capital Goods Consumer Goods 0 Capital Goods “ Stuff you use to make other Stuff” Tools, equipment, factories, other infrastructure Consumer Goods “ Stuff” for immediate Consumption. Food, consumer Electronics, etc. Allocative Efficiency Where a society decides to Produce on its PPF. A value Decision based on values/politics Productive Efficiency Full-employment of resources And producing at the lowest cost . A . B . C . D . E

3. Production Possibilities Frontier Capital Goods Consumer Goods 0 Capital Goods “ Stuff you use to make other Stuff” Tools, equipment, factories, other infrastructure Consumer Goods “ Stuff” for immediate Consumption. Food, consumer Electronics, etc. Allocative Efficiency Where a society decides to Produce on its PPF. A value Decision based on values/politics Productive Efficiency Full-employment of resources And producing at the lowest cost . A . B . C . D . E . F . G