Chapter 4

Production Possibility Curves

Production Possibility Curves
A Production Possibility Curves (PPC) is also
called an opportunity cost curve, a production
possibility boundary (PPB) and a production
possibility frontier (PPF).
What is PPC?

It is a curve that shows the maximum output

of two products and combinations of these
products that can be produced with the
existing resources and technology.
Production possibility Curve

Manufactured goods
Manufactu Agricultur
red goods al goods

100 0
80 75
60 100
0
0 150 Agricultural goods
Production Points
•Any point on the

Manufactured goods
PPC is efficient as
resources are fully
utilized there.
•Any point inside
PPC is inefficient.
•Any point outside
the PPC is desirable
but not attainable
with existing
resources and Agricultural goods
technology.
Individual activity 1 (Pg. 22)
Movement along the PPC
It shows the resources are being reallocated.
It also shows the opportunity cost of that
decision.
Manufactured goods

Agricultural goods
Individual Activity 2 (Pg. 23)
The Shape of the PPC
PPCs are usually bowed outwards. This is because the
best resources are used first to produce a particular
type of product.
 In the less cases where resources are equally suited to
producing both types of products, the opportunity
cost remains constant.
PPC can be straight line if it shows equal opportunity
cost.
Shifts in a PPC
If there is an increase in the quantity or quality of
resources. For example if the size of the labour force
increases, the maximum output that a can produce
will increases.
Manufactured
goods

Agricultural goods
Shift in the PPC
Consequences of a shift in the PPC

A shift to the right of the PPC increases a country’s

productivity potential.
Solve M.C.Q from Pages: 26-27