y

PRODUCTION Im
po
ss
ib
A
POSSIBILITY B le
Re
gi
on
C
CURVE (PPC) M
ov
em
en
tA
lo
D
ng
PP

IGCSE Re
A gio
re
C
E
U nW
nd h

REVISION er ere
-u
til Re
is so
ed ur
ces

CLASS Output
x
 INTRODUCTION CASE STUDY
Dangote Group, a cement and
The production possibility curve
Sugar Factory manufacture
is a graphical illustration of the both product for supply in
two possible outcomes that result Lagos. In 2022, the Production
in the production of two commodities manager decide to rationalize
given the limited resources available. its resources at various intervals
to produce both commodities for
The idea behind the PPC is to nd out the market. The table below show
the level of output a producer stands to the alternative output.
produce for Commodity X if resources
are allocated more to also produce Production Cement S u g a r
Possibilities (In Bags) (In Tonnes)
commodity Y.
If more resources are allocated to produce A 0 15
commodity Y, then a producer will have B 1 14
to sacrice some of the resources to be C 2 12
used to produce commodity X. This will D 3 9
imply that less of commodity X will be E 4 5
produced.
F 5 0
 y
A
15

LET’S DRAW THE 14 B

13
PPC OF DANGOTE 12 C

11
GROUP 10

9 D
Production Cement S u g a r 8
Possibilities (In Bags) (In Tonnes)

Sugar
7
6
A 0 15 5 E
B 1 14 4
C 2 12 3

D 3 9 2

E 4 5 1 F
0 x
F 5 0 1 2 3 4 5
2
Cement
 y
A
15

INTERPRETING 14 B

13
THE PPC 12 C

11
10
One both extremes, when all the resources were deployed
to produce sugar and cement respectively, the alternative 9 D
possibility was zero.
8
For 14 tons of sugar to be produced, enough resources

Sugar
7
meant for cement production was used up and therefore
alternative production possibility for cement was just one. 6

Similarly, if production output for cement will be increased 5 E

to two, then less resources for the production of sugar will
be used. This on the Y axis, production output dropped from 4
14-12, while on the x-Axis production of cement increased
from 1 to 2. 3

1 F
0 x
1 2 3 4 5
2
Cement
 y
A
15

LIFE APPLICATION 14 B PPC OF DANGOTE GROUP

13
OF THE PPC 12 C

11

The PPC curve Has a significant relationship with the 10

concept of opportunity cost. Therefore the PPC help firms D
9
to plan their production schedule in other to maximize profit.
8
The PPC helps individuals to understand and rationalize

Sugar
7
their resources judiciously in other satisfy their wants with
the limited resources at their disposal. 6

To a nation, the PPC analysis will aid economic planning 5 E

and efficient use of a nation’s scare resources to improve
the living standards of its ciezenry and improve her GDP. 4

1 F
0 x
1 2 3 4 5
2
Cement