AP Macroeconomics Flashcards: Opportunity Cost and the Production Possibilities Curve (PPC)
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 14 cards to help you master important concepts.
What is the Production Possibilities Curve (PPC)?
The PPC is a model used to show the tradeoffs associated with allocating resources between the production of two goods or services.
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What is the Production Possibilities Curve (PPC)?
The PPC is a model used to show the tradeoffs associated with allocating resources between the production of two goods or services.
What are the two general causes for a shift in the PPC?
The PPC can shift because of changes in the economy's factors of production (land, labor, capital) or because of changes in productivity or technology.
Using a production possibilities table, if an economy moves from producing 50 pizzas and 100 robots to 60 pizzas and 80 robots, what is the opportunity cost of the 10 extra pizzas?
The opportunity cost of producing 10 additional pizzas is the 20 robots that are no longer produced.
If a nation's workforce becomes more educated and skilled through new training programs, what happens to its PPC?
An improvement in labor quality, a factor of production, increases productivity and causes the nation's PPC to shift outward.
How does the PPC model illustrate the concept of scarcity?
The PPC illustrates scarcity by having a boundary, showing that given the available resources and technology, there is a limit to production and some combinations are unattainable.
What five key economic concepts does the PPC illustrate?
The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, underutilized resources, and economic growth or contraction.
What does a point of production located ON the PPC represent?
A point on the PPC represents efficiency, meaning all resources are being fully and efficiently utilized to produce a maximum output.
What determines the shape of the Production Possibilities Curve?
The shape of the PPC depends on whether opportunity costs are constant (a straight line) or increasing (bowed out from the origin).
How would a PPC model show an economic contraction?
An economic contraction would be represented by an inward shift of the PPC, indicating a decrease in the economy's productive capacity.
Define opportunity cost in the context of the PPC.
Opportunity cost is what is given up when reallocating resources from one product to another, as shown by moving from one point to another along the PPC.
How is economic growth represented on a PPC model?
Economic growth results in an outward shift of the entire Production Possibilities Curve, showing an increase in an economy's maximum potential output.
What does a point of production located INSIDE the PPC represent?
A point inside the PPC represents inefficiency or the underutilization of resources, as more of both goods could be produced.
How does the PPC illustrate opportunity cost?
The PPC illustrates opportunity cost by showing that to produce more of one good, an economy must produce less of another, demonstrating the tradeoff.
What is the difference between a movement *along* the PPC and a *shift* of the PPC?
A movement along the PPC reflects a tradeoff or a change in production choice using existing resources, while a shift of the PPC reflects a change in the economy's overall productive capacity.