1. Production
Possibilities
Function
Academic Decathlon Lesson 4
Berryhill Economics

2. Recall
 Opportunity cost is the value of the best
forgone alternative

3. PPF
 The production possibilities frontier (PPF) is
a diagram that shows production
combinations available to an economy
given finite factor inputs and technology
 It is a model economists use to illustrate
the concept of opportunity costs

4. Simple Linear Model
 Say you are a house painter and you and
your crew can paint either 20 small houses
or 10 large houses in a week. You can
also paint a number of combinations of the
two.
 It takes the same amount of time to paint
one large house as it does to pain 2 small
houses.

5. Simple Linear Model
 So what is the opportunity cost of painting
one large house?
 What is the opportunity cost of painting two
small houses?

6. Simple Linear Model
Small
House 20 18 16 14 12 10 8 6 4 2 0
s
Large
House 0 1 2 3 4 5 6 7 8 9 10
s

7. Simple Linear Model
 We just use these points on a graph to find
the PPF

8. Simple Linear Model
 All points on the curve are said to be
efficient because they represent the
maximum number of houses that can be
painted with available resources and
technology
 You could paint any combination of houses
on or inside the PPF

9. Simple Linear Model
 These points inside the model are attainable, but
inefficient—you are not working up to your
capabilities.
 Points outside of the PPF are unattainable and
cannot be reached due to the lack of resources
required to reach those points.
 You could increase your PPF if you increase your
factors of production, or resources.

10. Non Linear Model
 Most real world examples are curved when they
are put on a PPF. This is because of the law of
increasing opportunity costs.
 Law of increasing opportunity costs states that as
the production of anything rises, the opportunity
cost of forgone production will eventually
increase.
 It gets harder and harder to produce as you
increase production. It will cost more.

11. Non Linear Model