Topic Four (1.4): Production Possibility Curves

Introduction

This topic’s big question is: What is a PPC and what factors affect it?

What do I need to know?

  • Definition of a PPC
  • The significance of points under, on and beyond a PPC
  • How movements along a PPC relate to opportunity cost
  • The factors that can cause a PPC to shift

Read

This topic covers pages 14-17 of your coursebook. Start by reading your book so that you have a basic understanding and then complete the following activities:

Tasks

Consider:

  1. What would have to happen for an economy to produce the maximum possible quantity of economic goods?
  2. What would happen to the quantity produced if some resources became unemployed?
  3. What would happen if new resources were discovered? What would happen if there was a natural disaster?

Interact

Complete the following worksheet on the PPC:

COMPLETE – Topic 1.4 Worksheet Download COMPLETE – Topic 1.4 Worksheet

Learning about the PPC

Here is an excellent explanation of the PPC and what it looks like. 

READ – Production Possibilities Curve (Review Econ) Links to an external site.

For further explanation, read the following:

READ Capital versus Consumer Goods (Investopedia) Links to an external site.

Extension

Written question – Paper 2

The Chinese economy has been growing rapidly for the last 30 years and currently produces around 15% of the world’s output. An important driver of economic growth has been high levels of investment. This includes the construction of factories as well as transport infrastructure such as roads and railways.

Using a PPC diagram and information from the above extract, analyse the causes of economic growth in China. (6 marks)

Exam Hint

4 marks available for the diagram.

2 marks for the written analysis: 1 mark for explaining why the PPC shifts; 1 mark for linking this to economic growth.

Review

Now that you have completed all of the material for Module One, it is time to review the work you have studied.

Have a go at the exam questions on pages 18-20. This is good practice for your assignment. 

You can find the answers to the coursebook questions in General Resources.

Finally, you can check the answers to the worksheets in this module.

CHECK – Worksheet 1.1 Answers Download CHECK – Worksheet 1.1 Answers

CHECK – Worksheet 1.2 Answers Download CHECK – Worksheet 1.2 Answers

CHECK – Worksheet 1.3 Answers Download CHECK – Worksheet 1.3 Answers

CHECK – Worksheet 1.4 Answers Download CHECK – Worksheet 1.4 Answers

Quiz

It is time to check your understanding with the multiple-choice quiz. You must pass this quiz before moving on to the next module. Remember: you can do the quiz as many times as you want to, to practise and learn. Use it as an opportunity to test yourself!

Assignment

When you are fully prepared, feel confident with the material and have passed the quiz, you should complete Assignment One and submit it to your tutor via Canvas for marking and feedback.