AP Economics

This lesson on shifting the production possibilities curve will be on the Basic Economic Concepts portion of the AP examination(s). The production possibilities curve, as we know, shows the relationship between two options (one on the x-axis, the other on the y-axis) and how the opportunity cost of obtaining one over the other changes. In the last lesson, we learned different ways the curve can look based on different opportunity costs. In this lesson, we will analyze how the same curve can shift. Before we begin, let us cover what capital and consumer goods are. Capital goods are essentially those which are utilized in the production of other goods. Consumer goods are those which are made available to the general public for personal use. First, we can quickly cover how the curve can be shifted inward or to the left . This is extremely uncommon and won't appear on your AP examination, but is good to know because it helps us understand. For instance, let us use th...

This lesson on changing the production possibilities curve will be on the Basic Economic Concepts portion of the AP examination(s). As we learned in the last lesson, the production possibilities curve shows the relationship between two options (one on the x-axis, the other on the y-axis) and how the opportunity cost of obtaining one over the other changes. We also learned that opportunity cost tends to increase as the production of a good increases, giving the curve its shape. However, there are cases in which the production possibilities curve is not curved. For example, let us assume that the production abilities of Super Snacks change such that their new combinations of production are as shown in the table. If we analyze the opportunity cost from point to point within the table, we can notice a clear trend: for every taco produced, the production of 4 burritos is foregone each and every time. This is a situation in which a pair of goods has a constant opportunity cos...