Extracted text: Introduction to the Production Possibilities Curve (PPC) As you know, the basic economic problem is scarcity. Since we do not have enough scarce resources to satisfy everyone's needs and wants, we all have to make choices. We must choose how to spend our time, our energy, our money, and our material possessions, and for every choice that is made, a cost is suffered. The relationship between choice and cost can be shown in a graph called a production possibilities curve, or PPC. For example, consider a student who has 4 hours of free time in the evening. He or she can choose to spend some, all, or none of those 4 hours studying for a test the following day. He or she could also use the time to catch up on sleep. These choices can be graphed: Choice A - spend all 4 hours studying Choice B- spend 2 hours studying, and 2 hours getting extra sleep Choice C- spend all 4 hours sleeping Of course, other combinations of the 4 hours exist. The student could study for 3.5 hours, and get an extra half hour of sleep, or study for only 1 hour and sleep the other 3. D If ALL of the student's choices were graphed, they would form a line that is made up of an infinite number of points. We call that line, which shows all of the ways the student's 2 3 4. resource of 4 hours can be spent a "production possibilities curve." 1 STUDYING Notice, point "F" on the graph is outside the PPC. That is because it represents a combination (4 hours studying and 2 hours sleeping) that is greater than the resources available of 4 hours. Point F, therefore, is not an option that can be reached. Other choices can be graphed, as well, other than time. We can also graph how funds can be spent. АСTIVITY: 20- Consider a student who received $20 for his or her birthday. How could the funds be used? Create a PPC graph (at left) to show some of the 15+ student's choices. 1. Think of two school-appropriate categories for spending the total funds ($20). Place the categories on the blank graph, 10+ one on the X-axis, and one on the Y-axis. 2. Plot three or more combinations to show how the funds culd be spent. Label them points A, B, and C. 3. Connect the points to create a line. Label the line "PPC." 10 15 20 4. Plot a point outside the PPC. Label it point F. 5. Explain why Point F cannot be reached. SLEEPING