Graph #1

Production Possibilities Graph

Key:

• D- Inefficient/Attainable
• A, B, C- Efficient/Attainable
• E- Efficient/Unattainable

Factors of Production:

1. Land 
2. Labor 
3. Capital (Human/Physical)
4. Entrepreneurship  

 

Using F.O.P. in the most efficient way:                      Full Employment (FE):

1. Never 100% employment                               = Not 100% productive
2. 4-5% unemployment                                     = Not 100% employment
3. 100% factory capacity                                   = 4-5% unemployment
4. 80-90% capacity                                           = 80% factory capacity