Question

Define PPC and bring out the concept of opportunity cost in relation to PPC.
Answer for 8 marks​

Answer 1

Opportunity cost and the PPC. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. ... The shape of the PPC would indicate whether she had increasing or constant opportunity costs.

Lesson summary: Opportunity cost and the PPC

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The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.

For example, suppose Carmen splits her time as a carpenter between making tables and building bookshelves. The PPC would show the maximum amount of either tables or bookshelves she could build given her current resources. The shape of the PPC would indicate whether she had increasing or constant opportunity costs.

Answer 2

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