What is production possibilities curve?

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PPC shows the alternative combination of commodities. A nation can produce by fully utilizing all of its resources with the best technology available to it.

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Ppc refers to the graphical representation of all possible combination of two goods that can be produced with given resources and development

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Ppc curve shows different various combinations of two goods which can be produced with given resources

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PPC is a curve showing the combinations of such two goods which can be produced with the available resources along with constant technology.

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Definition:

The Production Possibilities Curve, also known as the production possibilities frontier, is a graph that shows the maximum number of possible units a company can produce if it only produces two products using all of its resources efficiently.

What is the definition of production possibility curve?

In business, the PPC is used to measure the efficiency of a production system when two products are being produced together. Management uses this graph to decide the ideal ratio of units to produce to minimize cost and waste while maximizing profits.

The graph shows the maximum number of units that a company can produce if it uses all of its resources efficiently. Thus, one product’s maximum production possibilities are plotted on the X-axis and the other on the Y-axis. The curve is drawn to represent the number of goods that can be produced using limited resources and a halt in technology at each point.

This downward sloping line represents the trade off between producing product A and product B. As the company diverts more resources to producing product B, the production of product A will decrease. Any point above the curve is unattainable with the given amount of company resources. Any point below the curve represents a production level that isn’t using 100 percent of the company’s resources.

One key assumption the PPC makes is that all resources for production are fixed. This means that the output of product A can only increase if the output of product B decreases.

Another assumption is that technological advances and production improvements are fixed.

Link:

Production Possibility Curve

https://edurev.in/studytube/production-possibility-curve/6b2fdcc4-8abb-4755-87de-4b09eeba2ebe_t?courseid=-1

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