Production possibilities curve

An introduction
Abstractions and Assumptions of a
PPC
• Compare 2 variables; goods or services
• Trade-offs or opportunity cost involved
• All available resources are fully employed
• All available technology is fully employed
• Productive efficiency: Resources are
employed in the least costly way
What type of curve illustrates the
label below?
Increasing
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Increasing
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Zero
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Zero improbable

opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Constant
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Constant
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Decreasing
opportunity
cost
per unit of
good B
What type of curve illustrates the
label below?
Impossible;
Decreasing not
opportunity supported
by
cost economic
theory
per unit of
good B
• What trade-offs are
involved?
• Why is the PPC
concave?
• What does point (E),
inside the PPC
illustrate?
• What is the
significance of point
(F), outside the PPC?
• Under what
conditions can point
F be reached?
Moving from point B
to point A, could
eventually expand
the frontier from
G,G to H,H