Exercise 1-2: Possibility Curve

Reference: Figure 1.1, 1.2, 1.3 and 1.4, Chapter 1, Principles of Microeconomics 6/e, Sayre, Morris

1.      What are these graphs representing?

·     The four figures represent various forms of the production possibilities curve which is a visual graphical representation showing various theoretical combinations of output that may be produced by adjusting the factors of production (land, labor, capital and entrepreneurship).

2.      What do they depict about scarcity, opportunity costs, and choice?

·     Scarcity: is a limited amount of something, be it time, money or a resource.

·     Choice: scarcity leads to choice regarding the most efficient path.

·     Cost Opportunity: is the value of the best alternative given up as a result of the choice made.

3.      What are some choices you have to make based on scarcity and choices in your life? Think about your income, time, assets, etc.

·     For me the greatest scarcity is time as I must allocate it in order to encompass online education, work, family and my kids spontaneous issues that arise. Therefore in order to accomplish all of this there are times when sleep is sacrificed for studies, which in turn may have a detriment on my other commitments if continued for a prolonged period.

4.      What was one significant opportunity cost you experienced by returning to school?

·     I am fortunate in that my part time studies did not require me to give something up as the company I am working for is paying the tuition. Other than my time to conduct the course as noted prior I have not had to sacrifice income or realign other budgeted items for education.