Question

3: Explain Production Possibility curve?

Production Possibility Cure (PPC) depicts alternative possibility of two goods with the given resources and technique of production. It is also called production Possibility Cure​

Answer 1

Production Possibility Curve can be explained as a curve in economics that measures the maximum output of two goods using a fixed amount of input.

Explanation:

• The input is any combination of the four factors of production:

1. Natural resources (including land)
2. Labor
3. Capital goods
4. Entrepreneurship.

• The manufacturing of most goods requires a mix of all four.

• In economics, the production possibilities curve is a visualization that demonstrates the most efficient production of a pair of goods.

• Each point on the curve shows how much of each good will be produced when resources shift to making more of one good and less of another.

       Alternate name: Transformation curve

       Acronym: PPC

• The production possibility curve portrays the cost of society's choice between two different goods.

• An economy that operates at the production possibility frontier, or the very edge of this curve, has the highest standard of living it can achieve, as it is producing as much as it can using its resources.

• If the amount produced is inside the curve, then all of the resources are not being used.