Gine Bert Fariñas Palabrica

12 – PISCES
Applied Economics
Quarter 3 – Module 5: Economic System and Production Possibilities Frontier

PRETEST
1. C
2. B
3. A
4. D
5. A

RECAP
1. RENT
2. ELECTRONICS
3. RESOURCES
4. PROFIT
5. WHAT TO PRODUCE
6. BANANA
7. INTEREST
8. ENTREPRENEURSHIP
9. CAPITAL
10. FIXED CAPITAL

ACTIVITIES

Activity 1: Economic System

Traditional Command Market Mixed

Haiti Cuba Hong Kong Sweden

Haiti has a largely Cuba has a command The economy of Hong Sweden is a
traditional economic (centralized) economy. Kong is a highly competitive mixed
system in which most The state controls all developed free-market economy featuring a
of the economy relies means of production, economy characterized generous universal
on subsistence and the government by low taxation, welfare state financed
farming, and sets priorities and almost free port trade through relatively high
government regulation emphases in economic and well-established income taxes that
is widely constrained. development. international financial ensures that income is
Haiti’s economy market. Its economy is distributed across the
system is based on governed under entire society.
customs, history and positive non-
time-honored beliefs. interventionism, and is
highly dependent on
international trade and
finance.
Activity 2: Production Possibilities and Frontier

A.
EBP Construction
(Production Possibilities Frontier)
9080
80
70 63
Cement ('000 units)

60
50 44
40 30
30
20
7
10 0
0
0 10 20 30 40 50 60 70 80 90
Plywood ('000 units)

B. The PPF is a straight line because MRT is assumed as constant. Same amount of commodity is
sacrificed to gain an additional unit of another commodity. It is assumed that all resources are equally
efficient in production of all goods.
C. Point G inside the PPF is an inefficient point. Point G is attainable, but it’s not using the resources
at the fullest. At point G, if goods are used at full capacity, the economy could be at any point,
meaning more would be produced.
D. Point H outside PPF is unattainable. Point H could be attained only if goods increase and the
economy shifts its PPF to the right. Such movement is considered an economic growth.

WRAP-UP

1. The four types of economic system: traditional economy;

command economy; market economy;
and mixed economy.
2. The Production Possibilities Frontier (PPF) shows the combination of goods and services that can
be produced and those that cannot given the resources.
3. In daily life, opportunity costs are the benefits or pleasures forgone by choosing on alternative over
another. The necessity of making trade-offs alters how we feel about the decisions we face. One of
the most important areas where we need to pay attention to tradeoffs is when we make decisions.

VALUING

This situation implies that the more a student gives time to

his study the more he or she will gain the marks that he or she deserves or she/he may get a higher
mark. This type of logic somehow also exists in real life like when starting a business, the more that
the owner was taking her/his time to establish the business the more it will pay off by making more
profit but in studying the profit was the mark that was given by the teachers. This teaches that you
have to sacrifice something like your excess time if you aim for a high great you have to work hard
for it.

POSTTEST

1. Economic System
2. Command Economy
3. Market Economy
4. Mixed Economy
5. Traditional Economy
6. Bartering
7. Trade-off
8. Opportunity Cost
9. Production Possibilities Frontier
10. Efficiency