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Production possibility curve: An introduction

The production possibility curve (PPC) also called the production possibility frontier indicates the combinations of any two goods or services that are attainable when the society's resources are fully and efficiently employed. In this video clip production possibility curve is constructed using the production of food and guns as an example. The production of food is measured on the vertical axis and the production of guns on the horizontal axis. The curve shows that if all resources are used exclusively for the production of food then 600 tons of food can be produced as indicated by point A. If all the resources are used exclusively for the production of guns then 6 million guns can produced as indicated by point B. Varying the resources used for the production of food and guns various combinations of guns and food can be produced as indicated by points c, d and e. Combining these points give us our production possibility curve. The curve is concave to the origin and indicates that to produce more of a product (for instance guns), a decline in the production of the other product (for instance food) is required.
Length: 02:20

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