What is Production Possibility Curve?
Production Possibility Curve (PPC) is the graphical representation of all the possible combinations of two goods that can be produced with the given resources and technology. Simply put, a PPC shows different combinations of two goods, that an economy can produce by fully utilizing its resources, assuming a fixed technology level.
Production Possibilities Curve (PPC) : Meaning, Assumptions, Properties and Example
As the resources available around us are scarce, we cannot satisfy all of our needs and wants. And even if all the resources in the economy are utilized in the best possible manner, their capabilities are restricted due to scarce resources. Therefore, we are forced to make economic decisions and choose among alternate goods and services to satisfy our wants in the best possible manner. Hence, society has to decide what to produce out of the infinite possibilities. The graphical presentation of this range of possibilities is known as Production Possibility Curve (PPC) or Production Possibility Frontier (PPF).
Table of Content
- What is Production Possibility Curve?
- Assumptions of PPC
- Example of Production Possibility Curve
- Properties of PPC
- PPC and Opportunity Cost
- Change in PPC (Shift and Rotation)
- Production Possibility Curve – FAQs
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