MODULE 3: The Production Possibilities Curve Model

Chapter Introduction

MODULE 3

The Production Possibilities Curve Model

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3The Production Possibilities Curve Model

In this Module, you will learn to:

Explain the importance of tradeoff s in economic analysis
Describe what the production possibilities curve model tells us about efficiency, opportunity cost, and economic growth
Explain why increases in the availability of resources and improvements in technology are the two sources of economic growth

A good economic model can be a tremendous aid to understanding. In this module, we look at the production possibilities curve, a model that helps economists think about the trade-offs every economy faces. The production possibilities curve helps us understand three important aspects of the real economy: efficiency, opportunity cost, and economic growth.