1. Define the factors of production (2)

2. Utilize the production possibilities frontier to model scarcity (2,16)

3. Utilize the production possibilities frontier to model increasing opportunity costs (2,16)

4. Utilize the production possibilities frontier to determine opportunity cost (1,16)

5. Determine comparative advantage and resulting specialization (1,14)

6. Determine the benefits of free trade, along with winners and losers (14,15)

7. Identify different economic systems and their characteristics (1,2)

8. Illustrate economic growth using the production possibilities frontier (1,2,13)

NOTE: This Module meets Ohio TAG's 1, 2, 13, 14, 15, 16 for an Intro to Macroeconomics Course

Important Notes for the instructor regarding this chapter:

The text provides a straightforward approach to the PPF. What is contained in the chapter might be more than what would be presented in an introductory macro course. Section 2.2 contains the critical portion of this concept.

Principles of Macroeconomics 2e: OpenStax CNX. Jun 4, 2018, Chapter 2, pages 27-44

Introduction to Choice in a World of Scarcity

How Individuals Make Choices Based on Their Budget Constraint

The Production Possibilities Frontier and Social Choices

Chapter Two: Key Terms

Chapter Two: Key Concepts and Summary

Chapter Two: Self Check Questions

Chapter Two: Review Questions

Chapter Two: Critical Thinking Questions

Chapter Two: Problems

Factors of production are discussed in 1.3: How Economists Use Theories and Models to Understand Economic Issues

Benefits of trade are more thoroughly covered in 20.1-20.2, but this topic is included in the unit on International Trade.

Economic systems are covered in 1.4: How To Organize Economies: An Overview of Economic Systems

Licenses and Attribution:
Principles of Microeconomics Chapter 2.2. Authored by: OpenStax College. Provided by: Rice University. Located at: http://cnx.org/contents/ea2f225e-6063-41ca-bcd8-36482e15ef65@10.31:24/Microeconomics. License: CC BY: Attribution

Production Possibilities

Lumen Learning: The Production Possibilities Frontier

Important notes for the instructor regarding this source: This is a unit on production possibilities from Lumen Learning. It includes some problems and questions, along with short videos.

Licenses and Attribution:

• CC licensed content, Original. Revision and adaptation. Provided by: Lumen Learning. License: CC BY: Attribution

• Hard Studies. Authored by: Thomas Anderson. Located at: https://www.flickr.com/photos/senoranderson/3890652995/. License: CC BY: Attribution

• All rights reserved content

  • The Production Possibilities Frontier, Part 3 u2013 The Economic Lowdown Video Series. Authored by: Federal Reserve Bank of St. Louis. Located at: https://www.youtube.com/watch?v=Nw0ugthoc8o. License: Other. License Terms: Standard YouTube License

  • The Production Possibilities Frontier, Part 1 u2013 The Economic Lowdown Video Series. Authored by: Federal Reserve Bank of St. Louis. Located at: https://www.youtube.com/watch?time_continue=6&v=nsQi2ipSP2c. License: Other. License Terms: Standard YouTube License

Comparative Advantage

Absolute and Comparative Advantage

Important notes for the instructor regarding this source. This provides a unit on comparative advantage, and includes some simple exercises.

Licenses and Attribution:

• This work is licensed under a Creative Commons Attribution 4.0 International License. You can also download for free at http://cnx.org/contents/69619d2b-68f0-44b0-b074-a9b2bf90b2c6@11.346

Attribution:

• For questions regarding this license, please contact partners@openstaxcollege.org.

• If you use this textbook as a bibliographic reference, then you should cite it as follows: OpenStax College, Economics. OpenStax CNX. http://cnx.org/contents/69619d2b-68f0-44b0-b074-a9b2bf90b2c6@11.346.

• If you redistribute this textbook in a print format, then you must include on every physical page the following attribution: "Download for free at http://cnx.org/contents/69619d2b-68f0-44b0-b074-a9b2bf90b2c6@11.346."

• If you redistribute part of this textbook, then you must retain in every digital format page view (including but not limited to EPUB, PDF, and HTML) and on every physical printed page the following attribution: "Download for free at http://cnx.org/contents/69619d2b-68f0-44b0-b074-a9b2bf90b2c6@11.346."

• For the Heritage Foundation’s Index of Economic Freedom: https://www.heritage.org/index/

There is not a data exercise for this topic separate from the Active Learning Exercise below. Students will create their own data set, along with a graph, in order to analyze marginal opportunity costs.

An extension of the Active Learning Exercise is as follows:

• Have students partner with each other to perform the same sets of tasks. They will complete the exercise individually, and then compare opportunity costs. With this information, have students create a single production possibilities frontier, combining their individual PPFs to create a bowed out curve.

Construct a production possibilities curve. Think of two activities that you might choose to do.

Consider products that would be produced as a result of these activities. Construct a graph based on these two activities, and label your axes with units of production per hour. Do NOT put production in terms of minutes spent on the activity. How many units of good A could you produce in one hour? How many units of good B could you produce in one hour?

For example, if one of your activities is studying for economics, instead of minutes spent studying, think of your production as pages read, or problems solved. If your other productive activity is working out, put your production in terms of number of repetitions or miles completed or calories burned.

Once the graph is completed, calculate the opportunity cost of each activity in terms of the others. It is acceptable to assume constant marginal opportunity cost for the sake of this exercise. Is this a reasonable assumption for your activities? Why or why not?