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Economics IGCSEPDF 14
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Production Possibility Curve (PPC), also known as the Production Possibility Frontier (PPF),
is an economic model that illustrates the maximum potential output combinations of two goods
or services that an economy can produce, assuming all its resources (factors of production) are
fully and efficiently employed with a fixed state of technology.
-It is graphical representation of opportunity cost
The Production Possibility Curve is a curve showing the various combinations of two goods
(e.g., consumer goods and capital goods) that can be produced in an economy when all
resources are fully and efficiently utilized.
•Drawing: Typically, the PPC is drawn as a curve that is concave (bowed outwards) to the
origin. This shape reflects the law of increasing opportunity cost.
•One good is plotted on the x-axis (e.g., Capital Goods) and the other on the y-axis (e.g.,
Consumer Goods).
The location of a production point relative to the PPC has significant meaning: