Understanding the Production Possibilities Schedule

Oct 13, 2025 by magicalceylontours.com 58 views

The Chart Shows a Production Possibilities Schedule for Sabrina's Soccer: Understanding the Concept of Opportunity Cost

Sabrina's Soccer is a small business that specializes in producing soccer balls and soccer nets. The company has a limited production capacity, and the management needs to make decisions about how to allocate its resources to maximize output. In this article, we will analyze the production possibilities schedule for Sabrina's Soccer and understand the concept of opportunity cost.

Understanding the Production Possibilities Schedule

A production possibilities schedule is a graphical representation of the different combinations of goods and services that a company can produce given its limited resources. The schedule is typically depicted as a curve that shows the maximum output of one good that can be produced given the resources available to produce another good.

In the case of Sabrina's Soccer, the production possibilities schedule is shown in the table below:

Combination	Soccer Balls	Soccer Nets
A	10	0
B	8	1
C	6	2
D	4	3
E	2	4

Analyzing the Production Possibilities Schedule

From the table, we can see that the company can produce a maximum of 10 soccer balls and 0 soccer nets (combination A), or 8 soccer balls and 1 soccer net (combination B), and so on. The schedule shows that as the company produces more soccer nets, it has to produce fewer soccer balls, and vice versa.

Opportunity Cost: The Trade-Off Between Soccer Balls and Soccer Nets

The production possibilities schedule highlights the concept of opportunity cost, which is the cost of choosing one option over another. In this case, the opportunity cost of producing one soccer net is the number of soccer balls that could have been produced instead.

For example, if the company chooses to produce combination B (8 soccer balls and 1 soccer net), the opportunity cost is 2 soccer balls, which could have been produced if the company had chosen to produce combination A (10 soccer balls and 0 soccer nets).

The Law of Increasing Opportunity Cost

As the company produces more of one good, the opportunity cost of producing an additional unit of that good increases. This is because the resources used to produce the additional unit of the good are not as productive as they were when producing the first unit.

In the case of Sabrina's Soccer, the opportunity cost of producing an additional soccer net increases as the company produces more soccer nets. For example, if the company produces combination C (6 soccer balls and 2 soccer nets), the opportunity cost of producing an additional soccer net is 1 soccer ball, which is less than the opportunity cost of producing an additional soccer net in combination D (4 soccer balls and 3 soccer nets), which is 2 soccer balls.

The Trade-Off Between Soccer Balls and Soccer Nets: A Real-World Example

The production possibilities schedule for Sabrina's Soccer highlights the trade-off between producing soccer balls and soccer nets. The company has to make a decision about how to allocate its resources to maximize output.

For example, if the company receives an order for 10 soccer nets, it has to decide whether to produce combination E (2 soccer balls and 4 soccer nets) or combination D (4 soccer balls and 3 soccer nets). The company has to weigh the opportunity cost of producing an additional soccer net against the revenue generated by producing the soccer nets.

The production possibilities schedule for Sabrina's Soccer highlights the concept of opportunity cost and the trade-off between producing soccer balls and soccer nets. The company has to make decisions about how to allocate its resources to maximize output, taking into account the opportunity cost of producing one good over another.

Recommendations for Sabrina's Soccer

Based on the analysis of the production possibilities schedule, we recommend that Sabrina's Soccer:

Diversify its product line: The company should consider producing other products, such as soccer cleats or soccer shin guards, to reduce its dependence on soccer balls and soccer nets.
Invest in new technology: The company should invest in new technology to increase its production capacity and reduce the opportunity cost of producing one good over another.
Develop a pricing strategy: The company should develop a pricing strategy that takes into account the opportunity cost of producing one good over another.

By following these recommendations, Sabrina's Soccer can maximize its output and increase its revenue.

Production possibilities schedule: A graphical representation of the different combinations of goods and services that a company can produce given its limited resources.
Opportunity cost: The cost of choosing one option over another.
Law of increasing opportunity cost: The opportunity cost of producing an additional unit of a good increases as the company produces more of that good.

Samuelson, P. A., & Nordhaus, W. D. (2010). Economics. McGraw-Hill.
Mankiw, G. N. (2012). Principles of economics. Cengage Learning.
Q&A: Understanding the Production Possibilities Schedule for Sabrina's Soccer

In our previous article, we analyzed the production possibilities schedule for Sabrina's Soccer and understood the concept of opportunity cost. In this article, we will answer some frequently asked questions about the production possibilities schedule and opportunity cost.

Q: What is the production possibilities schedule?

A: The production possibilities schedule is a graphical representation of the different combinations of goods and services that a company can produce given its limited resources.

Q: What is opportunity cost?

A: Opportunity cost is the cost of choosing one option over another. In the context of the production possibilities schedule, opportunity cost refers to the cost of producing one good over another.

Q: Why is the production possibilities schedule important?

A: The production possibilities schedule is important because it helps companies make decisions about how to allocate their resources to maximize output. It also helps companies understand the trade-offs between producing different goods and services.

Q: What is the law of increasing opportunity cost?

A: The law of increasing opportunity cost states that the opportunity cost of producing an additional unit of a good increases as the company produces more of that good.

Q: How does the production possibilities schedule help companies make decisions?

A: The production possibilities schedule helps companies make decisions by showing the different combinations of goods and services that can be produced given the company's limited resources. It also helps companies understand the opportunity cost of producing one good over another.

Q: What are some common mistakes companies make when using the production possibilities schedule?

A: Some common mistakes companies make when using the production possibilities schedule include:

Not considering the opportunity cost of producing one good over another
Not taking into account the law of increasing opportunity cost
Not diversifying their product line

Q: How can companies use the production possibilities schedule to increase revenue?

A: Companies can use the production possibilities schedule to increase revenue by:

Diversifying their product line
Investing in new technology
Developing a pricing strategy that takes into account the opportunity cost of producing one good over another

Q: What are some real-world examples of companies using the production possibilities schedule?

A: Some real-world examples of companies using the production possibilities schedule include:

Apple Inc.: Apple uses the production possibilities schedule to decide how to allocate its resources between producing iPhones and iPads.
Amazon: Amazon uses the production possibilities schedule to decide how to allocate its resources between producing books and other products.

The production possibilities schedule is an important tool for companies to make decisions about how to allocate their resources to maximize output. By understanding the concept of opportunity cost and the law of increasing opportunity cost, companies can make informed decisions about how to produce different goods and services.

Production possibilities schedule: A graphical representation of the different combinations of goods and services that a company can produce given its limited resources.
Opportunity cost: The cost of choosing one option over another.
Law of increasing opportunity cost: The opportunity cost of producing an additional unit of a good increases as the company produces more of that good.

Samuelson, P. A., & Nordhaus, W. D. (2010). Economics. McGraw-Hill.
Mankiw, G. N. (2012). Principles of economics. Cengage Learning.