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Name ________________________!

Production Possibilities Curve

The graph below shows the production possibilities curve for the economy of Alpha, which makes weapons of mass destruction and food. !

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1. If all resources are devoted to the production of food, Alpha can produce __________ pounds of food. 2. In order to produce 1,500 WMD, the opportunity cost in terms of food is ____________ pounds. To produce another 1,000 WMD, the opportunity cost will ________________ to ____________ pounds. 3. As long as the PPF continues to curve outward and downward, the opportunity cost of increased WMD output will __________________________. 4. Food doesnt easily convert into weapons of mass destruction so ______________ resources must be used as more weapons are produced. This is an example of the law ! of _________________________________________________

Mr. Johnson

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5. Find the combination of 2,500 WMD and 90,000 pounds of Food on Figure 1. Label this point A. 6. Is it possible for Alpha to manufacture the combination of food and WMDs at point A!

7. Why or why not?

8. Find the combination of 2,750 WMD and 70,000 pounds of Food. Label this point B. 9. Is point B possible?!

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10.Why or why not? ! ! 11.Find the point at 0 WMD and 140,000 pounds of food (called the specialization point) and label it point C. 12.Is point C possible? 13.Based on your answers above, where do possible combinations generally appear on a PPC?!

Important Concept: A point inside of the production possibilities curve is inefficient because it is possible to produce more of one or both goods without opportunity cost. 14.Find the combination of 2,000 WMD and 40,000 pounds of Food. Label this point D. 15.Show that it is inefficient by shading all of the attainable combinations that show that more of one or both goods can be attained.

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Mr. Johnson
1/26/14 page 2