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Production Possibility Curve

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8 views14 pages

Production Possibility Curve

Uploaded by

suchithar9903
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Production possibility

curve
What is production possibility curve
• The Production Possibility Curve (PPC) is a graphical representation
that shows the maximum possible combinations of two goods or
services that an economy can produce, given its resources and
technology, while efficiently utilizing these resources. It demonstrates
the trade-offs and opportunity costs associated with the allocation of
limited resources.
Key Concepts and Features of
the PPC:
• Scarcity
• Opportunity Cost
• Efficiency
• Economic growth and shifts in the PPC
• Shape of the PPC
Example
• Example 1: Consider an economy that can produce only two goods:
guns and butter. The PPC shows the trade-off between military goods
(guns) and consumer goods (butter). If all resources are devoted to
butter production, no guns will be produced, and vice versa. Any
combination along the curve represents different levels of gun and
butter production while using resources efficiently.
PPC
• Axes: The two goods or services being considered are plotted along
the horizontal and vertical axes.
• Curve: The curve represents the boundary of production capabilities.
Moving along the curve shows the trade-offs, while moving inside the
curve indicates underutilization of resources.

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