Production Possibilities Curve
Definition
The production possibilities curve (PPC), also known as the production possibilities frontier (PPF), is a graph that shows various combinations of two goods or services that can be produced by an economy, given its limited resources and technology.
Analogy
Imagine you have a pizza party and you only have a limited number of ingredients to make pizzas. The production possibilities curve would show you all the different combinations of pizzas with those limited ingredients that you can make.
Related terms
Scarcity: A condition where resources are limited compared to people's unlimited wants.
Opportunity Cost: The value of the next best alternative that must be given up when making a choice.
Efficiency: Producing goods and services using the fewest possible resources.
"Production Possibilities Curve" appears in:
Subjects (1)
Practice Questions (7)
Which point on the production possibilities curve represents an underutilization of resources?
What does economic growth represent on the production possibilities curve?
Which factors can cause a shift in the production possibilities curve?
What does a bowed-out (concave) production possibilities curve indicate?
What is the slope of the production possibilities curve a measure of?
When opportunity cost is constant, the production possibilities curve appears as?
What does a leftward shift of the production possibilities curve indicate?
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