The Production Possibilities Curve
Explore: How does a production possibilities curve reflect opportunity cost?

This interactive graph illustrates the units of guns and butter that can be produced with a hypothetical society's currently available resources and technology. Each point on the curve represents the greatest number of units of butter which society can produce if it chooses to produce the corresponding quantity of guns. At any point on the curve, producing more guns means fewer units of butter can be produced. Likewise, producing more units of butter means fewer guns can be produced. The graph shows that, initially, society is choosing to produce 2 units of guns (200 guns) and 7 units of butter (7,000 units of robots). To use the graph, drag the green triangle on the guns 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 guns (point "C" on the graph), how many pounds of butter can be produced?
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2. Starting from 200 guns, what is the opportunity cost of producing 100 more guns?
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3. What happens to the opportunity cost of guns as even more guns are produced?
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4. What happens to the opportunity cost of butter as butter production is increased?
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