The economizing problem - scarce resources and unlimited wants - highlights the need for society to make choices among available alternatives. The production possibilities curve is a graphical illustration of the options that are available at a given point in time.

The first graph illustrates the amounts of pizza and industrial robots that can be produced with a hypothetical society’s currently available resources and technology. Each point on the curve represents the greatest number of robots which society can produce if it chooses to produce the corresponding quantity of pizza. At any point on the curve, producing more pizzas means fewer robots can be produced. Likewise, producing more robots means less pizza can be produced. The graph shows that, initially, society is choosing to produce 2 units of pizza (200,000 pizzas) and 7 units of industrial robots (7,000 robots). To use the graph, drag the green triangle on the Pizza axis to the left or right to change the production mix and investigate opportunity costs. Clicking again on the triangle will establish that as a starting point. Click the Reset button to start over.

1. If society produces 200,000 pizzas (2 units - point "C" on the graph), how many robots can be produced?
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2. Starting from an initial 2 units of pizza, what is the opportunity cost of the third unit of pizzas?
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3. What happens to the opportunity cost of pizzas as even more pizzas are produced?
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4. What happens to the opportunity cost of robots as robot production is increased?
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Economic growth allows for expanded choices: larger quantities of both pizzas and robots become attainable with either advances in technology or the availability of greater resources. One way that greater resources may become available is by choosing to use some of society’s currently available resources to invest in the future—for example, by spending on education or research, or by producing capital goods.

The amount of resources available to an economy at some future point depends upon the choices it makes today. To use the graph, use the mouse to drag the scroll bar button to the left or right, observing the impact of different choices on the future position of the production possibilities curve.

1. How must society choose to produce today if it wishes its economy to grow faster?
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2. What is the opportunity cost of faster economic growth?
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