Assessing Information for Circular Flow Analysis
In order to effectively analyze the concept of PPC and Circular Flow, it is crucial to explicitly assess the provided information and derive meaningful conclusions. By understanding the interplay between production possibilities curve and circular flow in an economy, one can gain insight into resource allocation, market dynamics, and overall economic stability. This process involves a thorough examination of data, logical reasoning, and critical thinking skills to draw accurate interpretations and make informed decisions related to economic principles.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
PPC AND CIRCULAR FLOW Essential Skill: Explicitly assess information and draw conclusions.
Take out PPF Packet Pick a partner and review your answers in 5-6 minutes Use this time to discuss the questions you did not understand and start to gather specific questions
Fish and Fruit PPC Fish Fish 12 10 8 6 4 2 Fruit Fruit 30 5 10 15 20 25
Combinations 9 fish and 13 fruit Attainable Attainable 10 fish and 13 fruit Unattainable Unattainable Attainable Attainable 7 fish and 18 fruit
Maximum Efficiency 11 fish and 0 fruit Efficient Efficient Efficient Efficient 10 fish and 7 fruit NOT Efficient NOT Efficient 4 fish and 20 fruit
Movies and Books PPC Movies Movies 1. What is the opportunity cost to moving from point A to point B? 2. What is the opportunity cost of moving from point C to point B? 3. What does point Z represent? 1000 800 A 600 B 400 C 200 Z D 200 Books (per month) Books (per month) 1000 40 0 600 800
Production Possibilities Curve: Capital Goods and Consumer Goods Suppose a new government comes into power and forbids the use of automated machinery and modern production techniques in all industries. Which curve in the diagram would represent the new production possibilities curve? diagram would represent the new Suppose massive new sources of oil and coal are found within the economy, and there are major technological innovations in both industries. Which curve in the Suppose there is a major technological breakthrough in the consumer-goods industry, and the new technology is widely adopted. Which curve in the diagram would represent the new production possibilities curve? production possibilities curve?
Shifts along the Curve 1. 1. What would cause the What would cause the production possibilities curve production possibilities curve to shift from the original to shift from the original curve (XX ) to the new curve curve (XX ) to the new curve (YY )? (YY )? 2. 2. Why might a government Why might a government implement policy to move implement policy to move the economy from Point B to the economy from Point B to Point A? Point A?
Baseball Village 1. Shows the maximum amount of bats and peanuts Baseball Village can produce when using their resources efficiently 2. Under the curve 3. Outside of the curve 4. On the curve 5. Larger curve 6. Showing an expanse in the use of resources; something that will allow you to produce more of 1, or both, desired goods Technology is Improved More Resources (CELL) Economic institutions get better at fulfilling our wants
4 Assumptions of the Model 1.Full Employment 2.Fixed Resources 3.Fixed Technology 4.Two Goods
Constant v. Increasing OPP Cost Model-Not What is Common in the Real World
Shifts in the Production Possibility Curve Neutral Technological Change Butter C A 0 Guns D B
Shifts in the Production Possibility Curve Biased Technological Change Butter C B 0 Guns A
Review 1) Which of the following would not shift an economy's PPC? a) An increase in population. b) Doubling the amount of capital in the economy. c) An increase in the money supply. d) A technological advance. 2) Efficiency along the PPC implies, a) Goods are produced quickly. b) The state of technology is maximized. c) In order to get more of a good, some of another must be given up. d) Goods are distributed equitably.
Review 3) A PPC shows, a) The best combination of goods to produce. b) The plans for increasing output in the short run. c) What can be produced with various combinations of resources. d) Resources are constrained by choices. 4) An economy has a constant cost PPC. What do you know about the slope? a) A straight line. b) Bowed in. c) Bowed out. d) Convex to origin.
Review 5) What determines the opportunity cost along a PPC? 7) What statement below implies that a PPC will be an increasing cost curve? a) The kinds of goods being produced. b) The slope of the PPC. c) Choices made by the economy. d) The area under the PPC. a) Resources are scarce. b) Most resources are more productive in certain uses than others. c) Underemployment of productive resources. d) Diminishing marginal returns to scale. 6) Which of the following are assumptions underlying the PPC? a) Only two goods are produced. b) Technology, population, and capital are variable. c) Prices determine the position on the PPC. d) All the above.
Circular Flow Diagram Create a circular flow diagram using the terms listed on the sheet Include the * items as the four main players in the economy. Start by drawing pictures that symbolize the * items, and then label them. Connect the main players to one another with arrows going both directions. Use all the other items listed below to label those arrows that connect the main players to one another.
Factor Market Factor Market Taxes Taxes Purchase of Purchase of goods/services goods/services Households Households Household income, Household income, interest interest Firm Firm Gov t Gov t Taxes Taxes Product Market Product Market
where in the circular flow does the transaction take place? factor market product market
Christian buys a new Blu-Ray player at a local store.
Alexandra earns $8 per hour working a summer job at the spring factory.
Evan earns $25,000 in revenue from his ownership in a bike shop.
Ariana makes Christmas ornaments to sell at a local flea market.
JessicaCorp builds a new factory and hires 1,500 new workers.
