Production Possibilities(Exercise 1-2)

The graphs from Figure 1.1, 1.2, 1.3, and 1.4 represent the various combinations that can produce the maximum amount of output from the available resources.  They also demonstrate how a person and/ or a business must allocate their time and resources so that they do not waste either of these.  With these graphs a person or business can find out if they need to cut back or spend more of their resources and it allows them to make choices of how and where they want to allocate their resources.  When you are given a choice you have more than one alternative, these production possiblity graphs allows the person or business to discover the opportunity cost of choosing one alternative over another.

I have had to make many choices in my life but most of them are based on my income and lack of time.  I had to make the choice of not going on a family vacation to Mexico this coming up week, due to a lack of time.  I have final exams coming up, tonnes of school work to complete, and I have my two jobs that I can not miss.  It was a tough decision but in order to do good in school I need to allocate my resources responsibly.

By returning to school I experienced the opportunity cost of having an education so that I can get a higher paying job as I get older.  Yes, school is expensive, but the opportunity to make more money throughout my life is well worth it.


Example of a Production Possibility Curve: