Some PPCs are straight lines and some bow outward. Take equal steps along both, then switch real resources from one job to another and see why the curve bends.
01Case study 1 · Constant vs. increasing cost
Take equal steps
Both economies can make at most 100 consumer goods or 100 capital goods. Step each one toward consumer goods, 20 at a time, and watch what every step costs in capital goods.Both economies can make at most 100 consumer goods or 100 capital goods. Step each one toward consumer goods, 20 at a time, and watch what every step costs in capital goods.
0 consumer goods·step 0 of 5
Constant cost
Straight line
?1st 20
?2nd 20
?3rd 20
?4th 20
?5th 20
Capital goods given up for each 20 consumer goods.
Increasing cost
Bowed out
?1st 20
?2nd 20
?3rd 20
?4th 20
?5th 20
Capital goods given up for each 20 consumer goods.
02Case study 2 · Why the curve bows
Switch the resources
Caoland has five resources, and each is better at some jobs than others. They all start out making capital goods. Switch them to consumer goods one at a time and watch the curve they trace.Caoland has five resources, and each is better at some jobs than others. They all start out making capital goods. Switch them to consumer goods one at a time and watch the curve they trace.
Making capital goods
Making consumer goods
Nothing yet. Switch a resource over.
The curve you traced
0 consumer goods · 100 capital goods
Each card shows what the resource can make. The cost line says how many capital goods you give up for each consumer good it adds.
03Case study 3 · Check your read
Read the shape
Two questions the AP exam loves. Use what you saw in the first two case studies.Two questions the AP exam loves. Use what you saw in the first two case studies.
