What does a PPC graph show?

What does a PPC graph show?

The production possibilities curve (PPC) illustrates tradeoffs and opportunity costs when producing two goods. We can use the PPC to illustrate: Scarcity.

What are the 2 concepts revealed by a PPC?

The shape of a production possibility curve (PPC) reveals important information about the opportunity cost involved in producing two goods. When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve.

What does the PPC show quizlet?

production possibilities curve. a graph or economic model that shows the maximum combinations of goods and services, any two categories of goods, that can be produced from a fixed amount of resources. production possibilities frontier. the line on a production possibilities graph that shows the maximum possible output.

What are the features of PPC?

The two main characteristics of PPC are:

• Slopes downwards to the right: PPC slopes downwards from left to right.
• Concave to the point of origin: It is because to produce each additional unit of commodity A, more and more units of commodity B will have to be sacrificed.

Why is PPC bowed outward?

The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. The bowed out shape of the PPC in Figure 1 indicates that there are increasing opportunity costs of production.

What information can a production possibilities curve reveal?

The production possibilities curve shows the possible combinations of production volume for two goods using fixed resources. The assumption is that production of one commodity decreases if that of the other one increases.

Can a PPC line be straight?

A PPC curve can be a straight line only if the marginal rate of transformation (MRT) is constant throughout the curve. A MRT can remain constant only if both the commodities are equally constant and the marginal utility derived from their production is also constant.

What is PPC curve Class 11?

Production possibility frontier or production possibility curve (PPC) PPC is a curve which shows all possible combinations of two set of goods that an economy can produce with available resources and given technology, assuming that all resources are fully and efficiently utilized. COMBINATION.

What does production possibilities curve show?

The production possibilities curve (PPC) is a graph that shows all of the different combinations of output that can be produced given current resources and technology. Sometimes called the production possibilities frontier (PPF), the PPC illustrates scarcity and tradeoffs.

Why is production possibilities curve concave?

Production possibility curve is concave to the origin as due to limited resources the producer have to sacrifice one type of commodity in order to produce second commodity. when a curve is concave to the origin it mean it has an increasing slope and it will shift from left to right.

What does production possibilities curve illustrates?

Term production possibilities curve Definition: A curve that illustrates the production possibilities for the economy. A production possibilities curve (or PPC), like the one presented here, represents the boundary or frontier of the economy’s production capabilities.

What is production possibility curve?

production possibility curve. A graphical representation of the alternative combinations of the amounts of two goods or services that an economy can produce by transferring resources from one good or service to the other.