The Chart Shows A Production Possibilities Schedule For Sabrina's Soccer
Production possibilities schedule (PPS) is a graphical representation of the possible combinations of two goods that a country can produce with the given resources and technology. In the case of Sabrina's Soccer, the PPS shows the possible combinations of soccer balls and soccer jerseys that can be produced with the given resources.
What is Sabrina's Soccer?
Sabrina's Soccer is a small-scale soccer ball and jersey manufacturing company located in a developing country. They have limited resources but are capable of producing high-quality soccer balls and jerseys. Sabrina's Soccer has only two resources, which are labor and raw materials.
What is a Production Possibilities Schedule?
A production possibilities schedule (PPS) is a table that shows the possible combinations of two goods that can be produced with the given resources and technology. The PPS assumes that the resources are fixed and the technology is constant.
The Production Possibilities Schedule for Sabrina's Soccer
Assuming that Sabrina's Soccer only produces soccer balls and soccer jerseys, the PPS for Sabrina's Soccer is shown below:
| Number of Soccer Balls produced | Number of Soccer Jerseys produced |
|---|---|
| 0 | 20 |
| 1 | 19 |
| 2 | 17 |
| 3 | 14 |
| 4 | 10 |
| 5 | 5 |
| 6 | 0 |
The PPS shows that Sabrina's Soccer can produce a maximum of 20 soccer jerseys if they don't produce any soccer balls. On the other hand, they can produce a maximum of 6 soccer balls if they don't produce any soccer jerseys.
The Slope of the Production Possibilities Schedule
The slope of the production possibilities schedule (PPS) represents the opportunity cost of producing one good in terms of the other good. The opportunity cost is the value of the next best alternative that must be given up to produce more of the first good.
The slope of the PPS for Sabrina's Soccer is negative, which means that the opportunity cost of producing more soccer balls increases as more soccer balls are produced. In other words, the more soccer balls Sabrina's Soccer produces, the fewer soccer jerseys they can produce.
The Marginal Rate of Transformation
The marginal rate of transformation (MRT) is the rate at which one good must be sacrificed to produce an additional unit of the other good. The MRT is the absolute value of the slope of the PPS.
The MRT for Sabrina's Soccer is not constant because of the law of diminishing marginal returns. As more resources are allocated to the production of one good, the marginal product of those resources decreases. Therefore, the MRT increases as more of one good is produced.
The Efficient Production Point
The efficient production point is the point on the PPS where the company is producing the maximum amount of both goods. The efficient production point is also known as the point of production efficiency.
The efficient production point for Sabrina's Soccer is 3 soccer balls and 14 soccer jerseys. At this point, Sabrina's Soccer is producing the maximum amount of both goods with the given resources.
The Inefficient Production Points
The inefficient production points are the points on the PPS where the company is producing less than the maximum amount of both goods. The inefficient production points are also known as the points of production inefficiency.
The inefficient production points for Sabrina's Soccer are 0 soccer balls and 20 soccer jerseys, and 6 soccer balls and 0 soccer jerseys. At these points, Sabrina's Soccer is not producing the maximum amount of both goods with the given resources.
The Opportunity Cost
The opportunity cost is the value of the next best alternative that must be given up to produce more of the first good. The opportunity cost of producing one soccer ball is the number of soccer jerseys that must be given up, and the opportunity cost of producing one soccer jersey is the number of soccer balls that must be given up.
For example, the opportunity cost of producing the first soccer ball is 20 soccer jerseys, which is the number of soccer jerseys that must be given up to produce one soccer ball. Similarly, the opportunity cost of producing the first soccer jersey is 1/3 soccer balls, which is the number of soccer balls that must be given up to produce one soccer jersey.
The Law of Increasing Opportunity Cost
The law of increasing opportunity cost states that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases. This is because resources are not equally efficient in producing all goods.
The law of increasing opportunity cost is reflected in the PPS for Sabrina's Soccer. As more soccer balls are produced, the opportunity cost of producing an additional soccer ball increases because more and more soccer jerseys have to be given up to produce one additional soccer ball.
The Shifts in the Production Possibilities Schedule
The production possibilities schedule (PPS) can shift due to changes in the resources or technology. If there is an increase in the resources or an improvement in the technology, the PPS will shift outward, indicating the ability to produce more of both goods.
On the other hand, if there is a decrease in the resources or a deterioration in the technology, the PPS will shift inward, indicating the ability to produce less of both goods.
The Importance of the Production Possibilities Schedule
The production possibilities schedule (PPS) is an important tool for analyzing the trade-offs between the production of two goods. The PPS helps companies to determine the most efficient use of their resources and to identify the opportunity costs of producing one good over the other.
The PPS also helps companies to identify the shifts in their production possibilities due to changes in the resources or technology. By understanding the shifts in the PPS, companies can adjust their production strategy to maximize their output and profits.
The Conclusion
The production possibilities schedule (PPS) is a valuable tool for companies to determine the most efficient use of their resources and to identify the opportunity costs of producing one good over the other. The PPS for Sabrina's Soccer shows the possible combinations of soccer balls and soccer jerseys that can be produced with the given resources and technology.
The PPS also shows the law of increasing opportunity cost and the shifts in the production possibilities due to changes in the resources or technology. By understanding the PPS, companies can adjust their production strategy to maximize their output and profits.