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AP Macro: Production Possibilities Graphs

The document is a problem set for an AP Macro Economics class focusing on basic economic concepts, specifically the Production Possibilities Graph for Ford Motor Co. It includes questions about the consequences of different production combinations, plotting specific points, and explaining economic concepts such as opportunity costs and efficiency. The student is required to analyze production scenarios and their implications on resource allocation and market demand.

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sophiamjohnson
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4 views3 pages

AP Macro: Production Possibilities Graphs

The document is a problem set for an AP Macro Economics class focusing on basic economic concepts, specifically the Production Possibilities Graph for Ford Motor Co. It includes questions about the consequences of different production combinations, plotting specific points, and explaining economic concepts such as opportunity costs and efficiency. The student is required to analyze production scenarios and their implications on resource allocation and market demand.

Uploaded by

sophiamjohnson
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Name: ____________________

Sophia Johnson

2. _____/26

AP Macro Unit 1: Basic Economic Concepts


Problem Set #1
2. Draw Production Possibilities Graph for the Ford Motor Co. using the following
information:
(____/5)
A B C D E F G
Cars 0 10 18 25 30 33 35
Trucks 45 42 39 33 25 15 0

Troy'S A
p

33
E
25
15 F
G
to 181oz's so s scars
A. What are the consequences of Ford producing at combination A? Combination G? In
reality, are either combinations desirable? Why? Why not? (____/5)

The consequences of producing at A would be that Ford


would not have any cars and onlytrucks At combinationG
this wouldbe the opposite theywould have cars andno
only
othertrucks No because if you want to appeal to a widespread
market you will want to produce both cars and trucks Also
whatever you produce should partly depend on supply and demand
of what your consumers want
B. Plot the combination with 20 cars and 40 trucks and label it “X.” Plot the
combination with 25 cars and 20 trucks and label it “Y.” Explain what is happening
at these points? (____/5)

At point p Ford is under producing and not using their


materials efficiently At point it would be impossible
unattai able
to produce that amount of productgiven the
scarcity of the current resources

C. Explain, with examples, how your graph shows 5 concepts: opportunity costs,
efficiency, unemployment, the law of increasing opportunity costs, and economic
growth. (____/11)

enattain
Ami EE En
scarcity of the current resources
are producing
mygraphdisplaysopportunitycost because it shows the
whenyou
other Forexample
acertaingoodwhat it wouldcostyou toproduce
Forexamplewhen Ford produces 18 carsthey can produce39trucks
So choice to produce less cars they can make
4 194 9 9

Allocativeefficiency canbe seen with supply and demand This


is seen on the on thegraph when youeitherallocate all ofyour
resources to either cars or trucks productive efficiency is
seen by producing both cars and trucks and not just
one or the other
unemployment can beseen at point y because point
Yshows Ford not using all of their resourceseffectively Therefore
ifthere was unemploymentthey would not be employing all of their
resources to the fullest

nethegraph Because
In pn s FEEL if'ates L
by the production of each good
economyis growingresources
additionallymore will help anything that helpsproductivity
and trade helps economicgrowth

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