Production possibilities curves

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Use this

   Cards A to D on a trade (all made up). Card A, "Country P, one month (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Country P can make at most 60 phones or at most 30 laptops, or any mix on the straight line between. Card B, "Country Q, one month (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Country Q can make at most 20 phones or at most 20 laptops, or any mix on the straight line between. Card C, "The terms (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Country Q will sell laptops to Country P at 1.5 phones for each laptop. Before trade, each country uses only its own output. Card D, "A claim (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Country Q is worse at both goods, so it gains nothing from trade.

2. 1.

   Bo tests Card D's claim against cards A and B. What is the verdict?

   • Right: P is better at both goods, and a country that is better at both has no reason to trade
   • Wrong: a laptop costs Q 1 phone and P 2 phones, so Q has the comparative advantage in laptops
   • Wrong: Q gains because a laptop costs Q 2 phones, which is more than it costs P
   • Right: Q makes 20 phones against P's 60, so Q has less to trade and gains less
3. 2.

   Q makes 20 laptops and sells 10 to P at card C's price. Pia compares Q with Q's home output of 10 laptops and 10 phones. What does Q end with?

   • 10 laptops and 15 phones, 5 more phones than at home
   • 10 laptops and 20 phones, since each laptop sold brings 2 phones
   • 10 laptops and 25 phones, since Q still has 10 phones from its own output
   • 10 laptops and 10 phones, since selling laptops brings just the phones it would make anyway
4. 3.

   A reader says P should make both goods itself, since it is better at both. What is Esme's strongest objection?

   • At 1.5 phones a laptop, P buys one for less than the 2 phones it gives up
   • Q makes laptops faster than P does, so P should stop making them and buy from Q
   • P's workers make phones faster than Q's, so P should keep making phones at home
   • P loses its laptop industry entirely, which cannot be good for P in the long run
5. 4.

   Tala asks what the cards leave out about the trade. Which missing fact matters most?

   • Whether the straight-line curves are exactly straight, since real curves usually bend
   • How many laptops P makes now, since card A gives just the most it could make
   • Whether P and Q use the same money, since trade needs a common currency to work
   • Which workers lose jobs when each country specializes, and whether they can move

6. Use this

   Cards A to C on two plans for Country K (all made up). Card A, "The machine rule (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: Country K's total output this year is 100. Each year it splits its resources between consumer goods and machines. For each 10 percent of resources put into machines, next year's total output is 4 percent larger. Machines add output for as long as the country follows the plan. Card B, "The two plans (made up)". Who made it: written for this sheet. Table, columns Plan | Share of resources put into machines each year: Plan 1 | 30 percent; Plan 2 | 10 percent. Card C, "Consumer goods by year (made up)". Who made it: written for this sheet. Table, columns Year | Plan 1 | Plan 2: 0 | 70.0 | 90.0; 1 | 78.4 | 93.6; 2 | 87.8 | 97.3; 3 | 98.3 | 101.2; 4 | 110.1 | 105.3; 5 | 123.4 | 109.5; 6 | 138.2 | 113.9. Total consumer goods from year 0 through year 6: Plan 1 | 706.2; Plan 2 | 710.8.

7. 5.

   A reader says Plan 1 is better because its output grows faster. What is Ren's strongest objection from card C?

   • Plan 1's growth rate is 12 percent a year, which is too high a rate to last for long
   • Plan 2's growth rate of 4 percent a year is steady, so its people are happier each year
   • Its people consume less each year through year 3, and the total stays behind Plan 2 to year 6
   • Plan 1's people consume less each year, so the plan is worse for them in each period
8. 6.

   A reader says the choice between plans is a pure matter of math. Luz tests the claim. What is the best verdict?

   • Weak: yearly consumption crosses in year 4 but totals do not by year 6, so it depends on values
   • Weak: card C uses made-up numbers, so no choice can be drawn from the table
   • Strong: Plan 1 has a higher growth rate, and the plan with more growth wins the choice
   • Strong: Plan 2 has more total consumption through year 6, so it wins whatever people value
9. 7.

   Noah asks what the cards leave out about choosing a plan. Which missing fact matters most?

   • How much K's people value goods now compared with later, and how long they will wait
   • Whether the 4 percent per 10 percent rule is exact, since a real rule would vary
   • What Plan 2 would produce in year 10, since the cards stop at year 6 of the plan
   • Whether Country K has more or fewer people than the countries in other exercises

10. Use this

    Cards A to C on growth and the curve (card A is real data; cards B and C are made up). Card A, "Real GDP growth". Who made it: the Bureau of Economic Analysis (bea.gov), via FRED, read November 14, 2026. Table, columns Year | Percent change in real GDP from the year before: 2018 | 3.0; 2019 | 2.6; 2020 | −2.1; 2021 | 6.3; 2022 | 2.4; 2023 | 2.9; 2024 | 3.0. Card B, "Writer 1 (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: The 6.3 percent growth in 2021 shows the economy's production possibilities curve moved out more in 2021 than in any other year. Card C, "Writer 2 (made up)". Who made it: written for this sheet. Summary in our words, not a quotation: The fall of 2.1 percent in 2020 means the economy lost 2.1 percent of what it could produce.

11. 8.

    Kira tests Writer 1's claim against card A. What is the verdict?

    • Strong: growth happens when the curve moves, so any growth shows a shift
    • Strong: 6.3 percent is the highest figure in the table, so the curve moved out most in 2021
    • Weak: the table gives growth, not levels, so it says nothing about the level in 2021
    • Weak: after 2020's fall, part of 2021's 6.3 percent is a return toward the curve
12. 9.

    Ari chains the 2020 and 2021 changes on card A. Where is 2021's level compared with 2019's and with a 2.6 percent a year path?

    • Back to 2019's level, since the 6.3 percent gain more than offsets the 2.1 percent fall
    • About 4 percent above 2019, and above the 2.6 percent a year path, which would be 3 percent
    • About 4 percent above 2019, short of the 2.6 percent a year path, about 5 percent above
    • About 4.2 percent above 2019, since 6.3 − 2.1 = 4.2 and the path is irrelevant
13. 10.

    Milo asks which missing figure would best tell a shift of the curve from a move toward it. What is it?

    • Prices in each year, to turn the growth rates into dollars of output for the table
    • Real GDP growth rounded to two decimals, to make the comparison between years finer
    • Real GDP growth for the years before 2018, to extend the table backward in time to 2000
    • A yearly estimate of potential output, to compare actual output with what could be made