EconMovies Episode #3: Monsters/ Inc.

Name: _____________

Production Possibilities and Resources

Part 1- Key Terms: Define the following terms

1. Land natural resources that are used to produce goods

2. Labor Work that a person does for a company

3. Capital Assets available for a company or person

4. Entrepreneur A person who organizes and operates a business

5. Production graph that shows all of the different combinations of output that can be
Possibilities Curve
produced given current resources and technology.
6. Consumer Goods Products bought to satisfy needs and wants

7. Capital Goods Products used to make other products

Part 2- Practice- Use the graph below that shows the production possibilities for the cafeteria at Monsters Inc.
to answer the questions.
8. Identify a specific combination of bug shakes and worm
pizza that represent an inefficient use of resources. 50 bug
shakes and 4 worm pizzas

9. Identify a specific combination of bug shakes and worm

pizza that can be produced if the cafeteria uses all resources
efficiently. 40 bug shakes and 8 worm pizzas

10. Identify a specific combination of bug shakes and worm

pizza that is unattainable given the current amount of
resources. 80 bug shakes and 8 worm pizzas

11. What is the opportunity cost when the cafeteria decides

to produce 70 bug shakes instead of 40 bug shakes. the opportunity cost is 30 bug shakes

12. What is the opportunity cost when the cafeteria decides to produce 6 worm pizzas instead of 3 worm
pizzas? the opportunity cost is 3 worm pizzas
Part 3 - Check Your Understanding- Answer the following questions.

13. Explain why a country cannot produce a combination of products that is outside of its production possibilities curve.

A country cannot produce a combination because it is impossible, there are limited resources and technology so
creating a product outside of the line would not be beneficial or feasible.

14. What can cause a production possibilities curve to move (shift) outward to the right? Explain.

If the output becomes greater, meaning that there are more available resources.

15. Why does an increase in the production of capital goods lead to an increase in production of consumer goods in an
economy? Explain. This happens because they directly correlate

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Silly Glasses