The Production Possibility Curve (Production Possibility Frontier)

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Presentation transcript:

The Production Possibility Curve (Production Possibility Frontier)

PPC The PPC is a visual representation of the various output combinations that an economy can produce between 2 AND ONLY 2 goods/services. This is a visual representation of a TRADE-OFF and OPPORTUNITY COST. In theory, this model can be used with ANY 2 goods/services.

Basic Example:

Quantifying Trade-Offs/Opportunity Costs

Maximum Output

Shifts in the PPC - Examples The PPC will shift inward on both the X and Y axes.

Shifts in the PPC - Examples

Shifts in the PPC - Examples

Shifts in the PPC - Examples

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