Production Possibilities Curve- Macro Topic 1.2 (Micro Topic 1.3)
Summary
TLDRIn this educational video, Jacob Clifford introduces viewers to the concept of the production possibilities curve through an interactive drawing game. Participants draw squares and triangles within a time limit, illustrating scarcity and the trade-offs between goods. The video explains the curve's significance in economics, including efficiency, opportunity cost, and the law of increasing opportunity cost. It also touches on how improved resources or technology can shift the curve, leading to economic growth. The video concludes with a call to action for viewers to practice these concepts and offers a free resource for further learning.
Takeaways
- 😀 The video introduces an economics game where participants draw shapes within a time limit, illustrating the concept of scarcity and efficiency.
- ✏️ Participants are challenged to draw squares with their non-dominant hand, emphasizing the impact of resource allocation on production.
- 📊 The production possibilities curve (PPC) is introduced as a tool to visualize the trade-offs between two goods, showing the limits of production due to scarcity.
- 🔄 The concept of opportunity cost is explained through the game, highlighting the idea that choosing one option means giving up another.
- 📉 The video demonstrates the law of increasing opportunity cost, using the analogy of picking cherries versus playing video games to show how opportunity costs can change.
- 📈 The script explains how the PPC can shift outward due to increased productivity, better resources, or technological advancements, representing economic growth.
- 🛠️ The video uses a 'double pencil' as a memory device to symbolize productivity and economic growth, reinforcing the idea that improvements in these areas can expand the PPC.
- 💡 The importance of understanding and calculating opportunity cost is stressed, as it is a fundamental skill in economics for making informed decisions.
- 📚 The video promotes an educational resource called the 'ultimate review packet' for further study and practice of economic concepts, including the PPC.
- 🎓 The script concludes with a call to action for viewers to like, subscribe, and participate in a pop quiz to test their understanding of the video's content.
Q & A
What is the main activity Jacob asks viewers to participate in at the beginning of the video?
-Jacob asks viewers to draw as many squares as they can in ten seconds using their non-dominant hand.
What is the purpose of the drawing activity in the video?
-The purpose of the drawing activity is to illustrate the concept of production possibilities and opportunity cost in economics.
What does the production possibilities curve (PPC) represent?
-The production possibilities curve represents the different combinations of goods that can be produced with available resources, given a certain level of technology and full employment of resources.
Why can't Jacob produce 15 squares and 10 triangles simultaneously according to the PPC?
-Jacob cannot produce 15 squares and 10 triangles simultaneously because such a combination is outside the PPC, indicating it is unattainable with the current resources and technology.
What does a point inside the PPC signify?
-A point inside the PPC signifies inefficiency, as it represents a scenario where resources are not being fully utilized.
What is the concept of opportunity cost explained in the video?
-Opportunity cost is the value of the next best alternative that is foregone when making a decision. In the video, it is demonstrated by the number of squares Jacob has to give up to produce additional triangles.
How does the law of increasing opportunity cost apply to the example of picking cherries?
-The law of increasing opportunity cost applies to picking cherries as the easier cherries are picked first, and as one moves to higher branches, the opportunity cost of picking each additional basket of cherries increases.
What does a bowed-out shape of the PPC indicate?
-A bowed-out shape of the PPC indicates that the opportunity cost is not constant; it increases as one moves from producing one good to producing more of another.
What does a shift in the PPC represent?
-A shift in the PPC represents an increase in productivity, which could be due to more resources, better resources, or improved technology, allowing for the production of more output.
How can the PPC be applied to the overall economy?
-The PPC can be applied to the overall economy by showing combinations inside the curve as representing unemployment, points on the curve as full employment, and points outside the curve as potential growth areas.
What resource does Jacob offer to help viewers practice and review economic concepts?
-Jacob offers 'The Ultimate Review Packet' which includes study guides, exclusive videos, and worksheets to help practice and review macro and microeconomics.
Outlines
📊 Introduction to Production Possibilities Curve
Jacob Clifford introduces an economics game where participants draw squares and triangles within a time limit using their non-dominant hand to illustrate the concept of scarcity and efficiency. He explains the production possibilities curve (PPC), which shows the different combinations of goods that can be produced given limited resources. The video emphasizes the idea of opportunity cost, which is the cost of the next best alternative forgone. The opportunity cost is constant in this example, as producing one more triangle always results in giving up three squares. The video also introduces the Ultimate Review Packet as a resource for practicing and reviewing economics concepts.
🔄 Shifts in the Production Possibilities Curve
The second paragraph delves into how the PPC can shift outward, indicating increased productivity and economic growth. This shift can occur due to additional resources, improved technology, or better human capital. The video explains that points inside the PPC represent inefficiency, such as unemployment, while points on the curve represent full employment and efficiency. Points outside the curve are unattainable with current resources. The video concludes with a call to action for viewers to like and subscribe, and it introduces a pop quiz to reinforce learning. The host also provides a memory device for the concept, suggesting viewers associate the PPC with a hat and a double pencil as visual aids.
Mindmap
Keywords
💡Economics Game
💡Scarcity
💡Production Possibilities Curve (PPC)
💡Efficiency
💡Trade-offs
💡Opportunity Cost
💡Law of Increasing Opportunity Cost
💡Resources
💡Full Employment
💡Economic Growth
💡Ultimate Review Packet
Highlights
Introduction of an economics game involving drawing squares and triangles within a time limit.
Emphasis on using the non-dominant hand to illustrate the concept of scarcity.
Explanation of production possibilities through the number of shapes drawn.
Introduction of the production possibilities curve in economic theory.
Discussion on the concept of efficiency and the inability to produce outside the curve.
Illustration of the idea that points inside the curve represent inefficiency.
Explanation of trade-offs in resource allocation.
Introduction to the concept of opportunity cost in economic decisions.
Calculation of opportunity cost using the example of squares and triangles.
Introduction of the law of increasing opportunity cost.
Example of picking cherries and playing video games to explain increasing opportunity cost.
Importance of calculating opportunity cost when making economic choices.
Discussion on how the production possibilities curve can shift due to increased resources or technology.
Application of the production possibilities curve to the overall economy.
Mention of the Ultimate Review Packet as a resource for practicing economic concepts.
Memory devices introduced to help remember the production possibilities curve and economic growth.
Encouragement for viewers to like, subscribe, and participate in a pop quiz.
Transcripts
hey Internet this is Jacob Clifford now
it's time to play an economics game not
believe if James you're $200 you landed
on his property
no he's in jail I'm not gonna give money
to a criminal no actually this one's
more of a race so go grab a pencil and a
paper or when I say go I want you to
draw as many squares as you possibly can
in ten seconds and I'll tell you when to
start and with a stop but there's a
catch here you've got to use your right
hand even if you're left-handed you got
to use your right hand so I'll give you
a few seconds to get ready so on your
marks get set go
[Music]
stop well done great job now this time
you're doing the same thing over again
except switch to your left hand even if
you're right-handed you're doing this
left-handed and you're drawing as many
triangles as you can in ten seconds on
your marks get set go
[Music]
stop great job all right now let's see
if you actually beat me I got 15 squares
and only five triangles and some of
those triangles are really rough these
numbers give you your production
possibilities the amount of squares and
triangles you can produce in 10 seconds
and you can use these numbers to draw
the very first graphs that you learn in
an econ class the production
possibilities curve illustrates a lot of
the key concepts that you learn in
economics for example notice that I
can't produce 15 squares and 10
triangles all at the same time I can't
produce any combination that's outside
the curve why well because of scarcity
any combination on the graph is possible
and it shows the idea of efficiency
because I'm using all of my resources to
the fullest now imagine instead I
produce one square and only one triangle
now obviously I'm under utilizing my
resources the pencil and my time is
being wasted so any point inside the
curve is inefficient because I'm not
using all of my resources and the graph
also shows the idea of trade-offs when
you produce triangles you can't also at
the same time produce squares right when
you produce one means you can't produce
the other one again because of scarcity
now there's a skill here that you
absolutely have to be able to do and
practice it's calculating opportunity
cost now this goes one step further than
the idea of trade-offs opportunity cost
is the specific number of squares that
you give up when you produce a certain
number of triangles in my case I gained
five triangles but it cost me 15 squares
so each one triangle cost me 3 squares
now if I put all my time in producing
squares then I have to give up the five
triangles so each one square cost me one
third of a triangle that's my
opportunity cost my example is a little
easier because there's only two
combinations and I'm assuming the
opportunity cost is constant that means
every single time I produce a triangle
I'm going to give up another three
squares so another triangle give up
three squares another triangle give up
another three squares you see constant
opportunity cost by calculating
opportunity cost gets a lot harder when
the curve has a different shape for
example when it's boat out like this
this graph shows the idea of the law of
increasing opportunity cost which is a
lot easier to explain given a different
examples let's use playing video games
and picking cherries
when you
pick cherries you don't start the top of
the tree and try to get the hardest ones
to reach you start with the easy ones
the low-hanging fruit you grab those
really quick and then move on to the
next level and keep doing that over and
over again until finally eventually you
get to the ones that on the very top
they're super hard to reach notice that
the opportunity cost of each basket of
cherries that you pick is not constant
it gets bigger and bigger now on the
graph here's the combination that you're
producing if all you're doing is playing
video games when you go pick some
cherries that first basket is super
quick and easy to fill and you still
have plenty of time to play a lot of
video games
the opportunity cost from picking that
first basket is really low if you pick
another basket of cherries it's gonna
cost more time so now you have even more
video games that you have to give up the
opportunity cost is a little bigger and
this keeps happening over and over again
until that last basket of cherries and
you're spending all your time trying to
get those cherries and fill that basket
so you have no time for video games
notice increasing opportunity cost but
the most important thing is you have to
be able to calculate the opportunity
cost when you're moving between
different combinations in the graph if
you see a straight line that's constant
opportunity cost and opportunity cost is
the same a bowed out curve means the
opportunity cost is different and in
both cases it all depends if you're
moving up the curve or down the curve
this is a skill that you have to
practice and the good news is I have a
resource that's gonna help you do just
that it's gonna help you practice and
the best thing is it's free to start
right now it's called the ultimate
review packet and includes study guides
exclusive videos and worksheets to help
you practice and review macro and
microeconomics the unit 1 study guide is
waiting for you right now and it's free
it's in the link in the description
below but we're not done with the PPC
quick review combinations inside the
curve are inefficient on the curve our
efficient outside the curve are
unattainable given our current resources
but what if we have more resources or
better resources or better technology
well in that case the production
possibilities curve can actually shift
notice that I still only have 10 seconds
but now I can produce more than I ever
did before this change in productivity
allows me to reach combinations that
were once impossible and again it's
because I have better resources or more
resources now this whole idea the
concepts and the graph can be applied to
the overall economy
combinations inside the curve show
unemployment because we're not using our
resources points on the curve show the
idea of full employment we're using all
of our resource to the fullest
we're being efficient and points outside
the curve show you cannot produce them
because they're beyond our current
resources but if we have more resources
like more physical capital like machines
tools and factories or if we have better
resources like more human capital where
there's workers who are more experienced
and knowledgeable and educated then we
can produce more output and have
economic growth over time so what is the
memory device for this episode what's
the widget that goes on the widget wall
well there's gonna be two of them one is
the hat that I used in the other video
that I made about the production
possibilities curve dye and the other
one is gonna be my cool double pencil
that shows the idea productivity and
economic growth when you see these I
want you to remember the production
possibilities curve drawing all those
triangles and squares and the idea that
the curve can shift but don't go
anywhere we still have two things to do
number one it's time for you to like
this video and subscribe also it's time
for a pop quiz
at the end of these videos I give you a
few practice multiple-choice questions
to make sure you're actually getting
keep in mind they're not going to be on
the screen for very long so you have to
pause the video and answer the questions
and look in the comments below for the
answer key as always thank you so much
for watching let me know how I can help
you learn and love economics until next
time
you
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