Economics | 1.4 Creating and Interpreting a Production Possibilities Curve

Your task: using the data below, construct the production possibilities curve for the hypothetical country of Michigania. The country produces only two products: caps and balls (yes, they love sports in Michigania).Next, answer the questions that follow.

Production Possibility

A. B. C. D. E

Number of caps (in millions)

0 35 50 65 75

Number of balls (in millions)

80 68 54 35 0

You can draw this by hand, or you can use Word Art to label the graph and draw the curve. Your graph must have the following items: (5 points)

• Axis labels for balls and caps.
• Axis numbering for the main lines on the graph.
• Points A through E indicated on the graph.
• The production possibilities curve.

Questions to Answer: (5 points each. Please use complete sentences for full credit.)

• What is the trade-off if Michigania elects to produce only balls?
• What is the opportunity cost of producing 75 million caps in Michigania?
• How might Michigania be able to expand the production possibilities curve?