Production Possibilities Curve

Production Possibilities Curve graphs is graphical representation of the various combinations of maximum output that can be produced from the available resources and technology.  In the example, the society only produces two products; wheat and car.  To produce a high amount of cars, you will only have enough resource to produce low amount of wheat, visa versa, to produce high amount of wheat, a low production of cars will be the result in the opposite end.  Production possibilities graph help us define and calculate which production level would maximize outcome and profit, and it helps us identify the gain and loses of increasing or decreasing a certain production line.

An example of how scarcity and choices that has affected my life would be deciding on whether to travel during the summer holidays, or take summer courses.  The choices I made will affect many criteria, including: loss of income (on my day job), time (travelling will delay my expected graduation date furthermore), and the amount of money necessary to spend on a vacation.  With the help of the production possibilities curve, we better understand how to make these decisions.  For example, can I take a shorter vacation instead so I can still complete summer courses and not miss as much work? What is the maximum time (days) I can go on this small trip before it affects my school and work? With the graph, I can maximize and plan my schedule with the available resources, so I can get the most out of what is available to me.

There were quite a few significant opportunity cost I experienced by returning to school.  There are actually significant effects on both side of the equation.  By returning to school, I no longer have time to play soccer because of class conflicts, I can no longer work a second job, school is very expensive and I spend less time on Video games and hanging out with my friends. However, with the loss of these luxury items, I’ve earned knowledge through school, a diploma, better career opportunities, and I will be able to support and provide a better living for my family.  It might be a challenge now, but it will benefit me in a long run.  Like the book suggest, there is no free lunch, and every decision I make will affect not only me, but everyone around me for a very long time.