Guns vs butter is used in economics class to transform the two products on a PPC curve into "all military production" and "all consumer goods production". Points within the curve show when a country’s resources are not being fully utilised Production possibilities curve and opportunity cost The opportunity cost of a resource is the value of the best alternative use that is given up or sacrificed. Production Possibilities. During WWII, the United States and other countries placed limits on consumer products in order to increase production of goods used for military purposes. Econ Isle’s production possibilities are graphed to show its frontier, and then used to discuss the opportunity costs of its production and consumption decisions. Production Possibilities Curve - a graph that indicates all the possible combinations of two goods or services (or aggregates of goods and services) that can be produced within an economy given the full and efficient use of all available resources.Opportunity Cost:-The cost of an alternative that must be forgone in order to pursue a certain action. A production possibilities curve illustrates how efficient an economy is by indicating the possibly opportunities in the economy. PPF is a line on the production possibility curve that show the maximum possible output an economy can produce. (T/F) 8. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. In business analysis, the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources. Suppose an economy produces only two goods cars and computers as shown in image Now let initially the economy is producing at point A , after sometime economy decided to increase the production of cars from point A to point B. A) A B) B C) C D) All of the curves illustrate a production possibilities frontier with increasing opportunity cost in the production of VCRs and telephones. 4. The production possibilities curve shows that when we produce more of one good or service, we produce less of another. In the case of Zanadu, where two products are produced, the opportunity cost of the use of resources is measured in terms of the production of laptops and mobile phones. (T/F) 9. 7. An economy that operates on its production possibilities curve is efficient. The opportunity cost of a bushel of wheat is the money that must be sacrificed in order to produce it. The production possibilities for an economy expand as the supplies of factors of production … Marginal cost is the opportunity cost A) that your activity imposes on someone else. B) that arises from producing one more unit of a good or service. Segment 1 of The Production Possibilities Frontier uses the fictional economy of Econ Isle to discuss how limited resources result in a scarcity problem for the economy. Opportunity Cost. Opportunity Cost Opportunity cost is defined as the value of next best alternative ,so opportunity cost measures the sacrifice we …