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Mt. San Jacinto College – CE – Department of Economics – Principle of Macroeconomics (ECON201)
Chapter 2. Production Possibilities Frontier (PPF) Framework: Pre-Class & In-Class Activities Packet
Learning Objectives
Chapter 2 deals with the production possibilities Frontier (PPF) or curve (PPC)
and how it can be used to illustrate the economic concepts of scarcity, choice,
opportunity costs, efficiency, and economic growth. After reading this chapter,
Students should be able to:
Show how scarcity is represented by combinations outside the production
possibility curve (PPC) are unattainable;
Describe choice as the fact that one must choose among the alternative bundles
available along the PPC;
Calculate the opportunity cost (slope) that is given up to get another unit of the
second good along the PPC;
Discuss efficiency and what it means to be on the PPF (PPC) rather than
inside it; and
Explain how Economic growth is represented by shifting out the production
possibilities curve.
The Opportunity cost of Producing Good X in
terms of Good Y can be calculated as,
Units of Good Y Forgone
Units of Good X Gained
Chapter 2. Production Possibilities Frontier (PPF) Framework: Pre-Class & In-Class Activities Packet
Name/ I.D. Number: ___________________________________________ Section: _______________ Date: ______________
Part 1. Video Questions on “Investing” – on education and training (Human Capital formation) and Opportunity costs
1. What did Josh gain by choosing to work right out of high school instead of pursuing further education or training?
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2. What was the opportunity cost for Josh by choosing to work instead of getting more training or education right out of high school?
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3. What was the opportunity cost for Sandy by going to school of Cosmetology to be a Stylist?
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4. What was the opportunity cost for David for a training program in Graphic Design?
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5. What was Lisa’s opportunity cost for being an account executive for an Ad agency after four years in college?
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6. How did the classmates’ careers differ regarding levels of income and satisfaction at 10th year reunion?
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7. Why did these differences in income and level of satisfaction exist? How could the classmates improve their career situations?
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