Lesson 7
How Economists Use Models
Using the Production Possibilities Frontier

Objectives:
Students will be able to:
1)explain what models are and to identity common examples of models used in everyday life and explain why it is necessary for economists to use models in their studies of the economy
4) read and plot values on a graph
5) read and explain the meaning of a production possibilities frontier
6) draw a production possibilities frontier from data supplied on a table.

Materials:
1)Several examples of models-e.g. a Globe, a map, a graph, a model airplane/car, etc
2) graph paper, rulers

Activities:
1) Warm-Up: a)What is a model and what is its purpose? What are some examples of models? What is an economic model? B)make a prediction of something. How do you know if it’s accurate?
2) How do we decide how much to produce?
a)What is an economic model? Students will be presented with examples of common models-which are theories or ideas of what something is like or how something works [eg. Globes, model airplane, map]- and asked to compare them to economic models. Economic models give theories about how the economy works. Economists use assumptions to make models. Economists use models to make predictions [e.g. how prices will change, the number of cars that will be sold next year, the unemployment, the effects of a tax cut].
b) The production possibilities frontier is a model (specifically a line graph) that predicts and represents the different combinations of two product that can be produced from a given quantity of the four factors of production. Students will be given a definition of productivity and its importance in determining whether the business is using all its factors of production or else is using them inefficiently. After being led through one example using the personal narrative on pg. 24 (“Should I grow more cucumbers or more tomatoes?) on the board, students will answer questions and construct their own line graphs on a problem set. I will walk around, monitor, and provide help.

Evaluation:
1) Classroom Participation/Work, Problem Set
2) Homework: Students will: Finish problem set if necessary, Prepare for Exam.