Opportunity Cost

Watch this lecture about opportunity costs with the use of the production possibilities frontier. Make sure to go back to the main reading material for Unit 1.4 as it explains the meaning behind the concept of the PPF. In this video you will see how we can apply the production possibilities model to examine the choices to produce more of some good and less of another. The PPF shows the goods and services that an economy is capable of producing – its possibilities – given the factors of production and the technology it has available. The model specifies what it means to use resources fully and efficiently when a combination of the goods is represented on the line. Think about what it would mean to be: (1) inside the line and (2) outside the line.

Source: Khan Academy
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Last modified: Wednesday, February 24, 2021, 4:15 PM