Assuming that no resource is equally efficient in production of all goods, the curve which shows the production potential of the economy is 'Production Possibility Curve'.

Production Possibility Curve (PPC)

The Production Possibility Curve (PPC), also known as the Production Possibility Frontier (PPF), is a graphical representation that shows the maximum possible output combinations of two goods or services an economy can produce using its available resources and technology. It illustrates the production potential of the economy under a set of assumptions.

Explanation:

The PPC is based on the assumption that resources are scarce and limited in an economy. It also assumes that resources are not equally efficient in the production of all goods and services. This means that some resources are better suited for producing certain goods, while others are better suited for producing different goods.

The PPC demonstrates the trade-offs an economy faces when allocating its resources between the production of two goods. It shows the various combinations of the two goods that can be produced given the available resources and technology. The curve typically slopes downward, indicating that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases.

Properties of the Production Possibility Curve:

1. Scarcity: The PPC illustrates the concept of scarcity, as it shows that an economy cannot produce an unlimited quantity of both goods due to limited resources.

2. Opportunity Cost: The PPC demonstrates the concept of opportunity cost. As an economy produces more of one good, it needs to sacrifice the production of the other good. The opportunity cost is the value of the next best alternative foregone.

3. Efficiency: The PPC shows the efficient use of resources. Points on the curve represent efficient production levels, where all available resources are fully utilized. Points inside the curve indicate inefficiency, as resources are underutilized.

4. Trade-offs: The PPC highlights the trade-offs an economy faces when allocating its resources. Moving along the curve implies shifting resources from the production of one good to the other, resulting in a trade-off between the two goods.

5. Increasing Opportunity Cost: The concave shape of the PPC indicates increasing opportunity cost. As an economy specializes more in the production of one good, it needs to allocate less efficient resources from the production of the other good, leading to a higher opportunity cost of producing additional units.

6. Economic Growth: The outward shift of the PPC over time represents economic growth. This can result from an increase in resources, technological advancements, or improvements in productivity.

In summary, the Production Possibility Curve (PPC) illustrates the production potential of an economy by showing the maximum possible output combinations of two goods or services. It reflects the concept of scarcity, opportunity cost, efficiency, trade-offs, increasing opportunity cost, and the potential for economic growth.