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BA Core 1 - LU 1.2 - BSBA 1B

Scarcity means that resources are limited and can never fully satisfy all human wants. It requires making choices between alternatives. A production possibility curve (PPC) illustrates the tradeoff between producing different goods given limited resources, demonstrating scarcity and opportunity cost graphically. Points on the PPC represent efficient allocation of resources, while inside points are inefficient and outside unattainable. The slope of the curve shows the cost of choosing one good over another.

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Denise Katrina Perez
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40 views

BA Core 1 - LU 1.2 - BSBA 1B

Scarcity means that resources are limited and can never fully satisfy all human wants. It requires making choices between alternatives. A production possibility curve (PPC) illustrates the tradeoff between producing different goods given limited resources, demonstrating scarcity and opportunity cost graphically. Points on the PPC represent efficient allocation of resources, while inside points are inefficient and outside unattainable. The slope of the curve shows the cost of choosing one good over another.

Uploaded by

Denise Katrina Perez
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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SCARCITY AND CHOICE

What is scarcity?
■ The noun scarcity comes from the adjective
scarce, which means “restricted in quantity
or availability.”
■ Scarcity means that there are never enough
resources to satisfy all human wants.
■ The state of being scarce or in short supply;
shortage
What is a choice?
■ Ability to freely decide between alternatives.
■ Our ability to make decisions when presented
with two or more options.
■ The act of picking or deciding between two or
more possibilities.
For example, if a child only has $3 and he wants
to have a cup of ice cream and a cup of hot
chocolate which each costs $2, he has money
scarcity and has to make a choice. If he chooses
a cup of ice-cream then the cost of a cup of hot
chocolate ($2) is his opportunity cost.
Opportunity cost
is what we give up when we choose one thing over
another.
Needs
Is something that is necessary to live and function.
Wants
Is something that can improve your quality of life.
PRODUCTION
POSSIBILITY CURVE
WHAT IS
PRODUCTION
POSSIBILITY CURVE?
■ A production possibility curve (PPC), also known as a
production possibility frontier (PPF).
■ It is a graphical representation that illustrates the maximum
combination of two different goods or services that an
economy can produce given its available resources and level
of technology. It shows the trade-off between producing one
good versus the other, demonstrating the concept of
opportunity cost. A point on the PPC represents an efficient
allocation of resources, while points inside the curve
indicate underutilization, and points outside the curve are
unattainable with the current resources and technology.
KEY CONCEPT OF
PRODUCTION
POSSIBILITY CURVE
Scarcity

■ The PPC highlights the fundamental economic problem of


scarcity, which implies limited resources (such as labor,
capital, and technology) relative to unlimited human wants.
Efficiency

■ Points on or inside the PPC represent inefficient resource


allocation, while points on the curve represent efficient
utilization of resources. Understanding efficiency is crucial
in optimizing production.
Opportunity Cost

■ The slope of the PPC reflects the opportunity cost of


producing one good over another. Opportunity cost is the
value of the next best alternative foregone when making a
choice.
Economic Growth

■ Shifts in the PPC over time represent economic growth,


usually resulting from factors like technological
advancements, increased resources, or improved efficiency.
Trade-offs

■ The PPC illustrates the concept of trade-offs. To produce


more of one good, a society must give up producing some
quantity of another good. This highlights the idea that
resources are limited and choices must be made.
Thank you!
🤪🤪🤪

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