The production possibilities curve (PPC) exists as a graph that demonstrates all of the various combinations of output that can be produced given existing resources and technology.
The production possibilities curve (PPC) exists as a graph that demonstrates all of the various combinations of output that can be produced given existing resources and technology. Sometimes named the production possibilities frontier (PPF), the PPC illustrates scarcity and tradeoffs.
PPF stands for the production possibility frontier and it exists illustrated by supporting the production of one good at the x-axis and another good at the y-axis. It thereby demonstrates all the possible varieties that can be produced with limited resources.
Scarcity: The resources that require to be utilized because they serve as input are limited or scarce and these same scarce resources exist used by an economy to produce the goods. Therefore, the Production possibility curve exists drawn and it illustrates the scarcity of resources known to an economy.
Choice: An economy has a preference to produce among different combinations of goods that lie on the production possibility curve. Therefore, the curve displays the choice as well.
Opportunity cost: Suppose the economy exists producing a bundle of goods 1 and 2 and the bundle stands (x,y). Now, if it desires to increase the consumption of good 1 by 1 unit, it has to decrease the consumption of good 2. Therefore the opportunity cost of producing a unit of good 1 exists in the sacrifice that has been created for good 2.
Productive efficiency: An economy utilizes all its scarce resources to produce two goods but whether it is utilizing those resources efficiently exists the point of concern. If it uses them efficiently, it creates the production possibility curve otherwise at a point that lies somewhere inside the PP curve.
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