1. Production Possibilities Curves

2. Production Possibilties The production possibilities curve (PPC) or the production possibility frontier (PPF) is a graph that shows alternative ways to use an economy’s resources. It depicts the trade-off between any two items produced.

3. Production Possibilities It indicates the opportunity cost of increasing one item's production in terms of the units of the other forgone. It shows the maximum obtainable amount of one commodity for any given amount of another commodity, given the availability of factors of production.

4. Efficiency, Growth and Cost A production possibilities frontier represents an economy working at its most efficient level of production. Efficiency means using resources in such a way as to maximize the production or output of goods and services. However, economies often operate inefficiently.

5. Efficiency, Growth, and Cost Any point under the curve indicates an underutilization of resources. Points outside the curve are beyond the production capabilities and are impossible.

6. Efficiency, Growth, and Cost Resources and capabilities are always changing. When an economy grows, a nation’s ppc will “shift to the right.” When an economy shrinks a nation’s ppc will “shift to the left.”

7. Efficiency, Growth, and Cost The law of increasing costs states that as production switches from one item to another, more resources are necessary to increase production of the second item, increasing opportunity cost. Explains why most ppf’s curve— trading off more to get less additional output.