ECONM-I · Unit 03 · The PPF lab
An economy that produces only bread and computers. Slide along the curve to see what one good costs in units of the other. Then watch growth move the whole frontier outward.
tool · the PPF lab
Bread on one axis, computers on the other. The curve shows the most this economy can produce of each, given its workers, machines, and electricity. Drag the slider to move the production point along the frontier. The Opportunity Cost readout tells you how many loaves of bread the next computer costs at that point.
what just happened
Currently producing 600 loaves and 60 computers. The slope of the frontier at this point is about 10 loaves of bread per computer: if the economy redirected enough resources to make one more computer, it would lose roughly 10 loaves of bread doing so.
Quick check
Drag the slider all the way toward "all computers." Watch the Opportunity Cost readout (loaves of bread per computer). What happens to it?
Defined on: the chart and Opportunity Cost readout above.how the lab teaches
If the chart above seems abstract, three observations help. Each one is a move you will return to later in the course.
1. Opportunity cost is the slope. The Opportunity Cost readout is the slope of the frontier at the production point. Move the slider toward "all computers" and watch the opportunity cost get larger. The last computers cost more bread to produce than the first ones did, because the resources being redirected are getting worse and worse at making computers.
2. Growth is the curve moving outward. Click "grow the economy 10%." The whole frontier shifts. The economy can now produce more bread for the same amount of computers (or more computers for the same amount of bread, or some of both). This is what economic growth looks like in this diagram. Unit 9 takes up what makes the frontier move.
3. Inside the curve is wasted potential. The chart doesn't let you move inside the frontier in this version of the lab; the production point sits on the curve. But it could. A recession is when an economy operates at a point inside its frontier: factories below capacity, workers unemployed, machines idle. Unit 11 takes that up.
Quick check
Click grow the economy 10%. The whole frontier moves outward (the original sits behind, dashed). In macroeconomic terms, what does that outward shift represent?
Defined on: the second observation above and the grow-the-economy button.