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BASIC ECONOMICS 2.

5 | Factors of Production, Production Possibilities Curve


1. There are four types of resources that make up the factors of production. They are:

_______________ resources.

_______________ resources.

_______________ resources.

________________________________

2. ______________ resources: The humans whose _______________ and __________ go into


the production of ____________ and services.
3. The supply of and demand for a ________ often determines a humans _______________.
4. ____________________ resources are materials obtained from the _________, ________,
and _______.
5. _______________ resources: The _______________ and _______________ needed to
produce goods and services.
6. _______________________: Ability to _______ an opportunity, and ____________ a
business to chase it.
7. An example of each type of resource is:

__________________________________________________

__________________________________________________

__________________________________________________

__________________________________________________

8. The production possibilities curve demonstrates the ________________ that occur when
deciding what to produce, or __________________ resources towards.
9. The curve demonstrates _____________ production levels, and the _____________ _______
of producing one thing over another.
10. The simple formula for calculating the opportunity cost is: OTHER, OVER
For X Change of Y over change of X (divide Y by X)
For Y Change of X over change of Y (divide X by Y)

PRACTICE PRODUCTION POSSIBILITIES CURVE


COUNTRY-A CAN PRODUCE A MAXIMUM OF 70 CARS OR 35 BOATS.
Label the Y Axis Cars
Label the X axis Boats
Plot 70 cars with 0 boats, then 35 boats with 0 cars
Connect the dots
Shade the area of attainable production.

a) Assuming the O.C. for each car is a boat, how many cars would be produced if
Country A produced 20 boats?
b) How many boats would be produced if Country A produced 10 cars?
c) What if Country A demanded its factories to produce 50 cars AND 30 boats? Is this
possible? Why or why not?
d) What can Country A do to make it possible?

MORE PRACTICE
1. Planet Vulcan can produce a maximum of 100 starships a day if it solely focused on
starships. If it solely focused on battle cruisers it can produce 30 per day.
Label the Y Axis starships
Label the X axis battle cruisers.
Plot the maximum production for both.
Connect the dots
Shade the area of attainable production.

a) If Planet Vulcan dropped starship production to 50 starships, how many battle cruisers
could it produce?
b) What is the opportunity cost of each battle cruiser?
c) Vulcan is producing 50 starships and 5 battle cruisers. If you were in charge of Vulcan,
what would you tell your producers to do?
KEY VOCAB
HUMAN RESOURCES

PRODUCTION POSSIBILITIES CURVE

CAPITAL RESOURCES

OPPORTUNITY COSTS

NATURAL RESOURCES
ENTREPRENEURISM