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Production possibilities curve

An introduction

Abstractions and Assumptions of a


PPC

Compare 2 variables; goods or services


Trade-offs or opportunity cost involved
All available resources are fully employed
All available technology is fully employed
Productive efficiency: Resources are
employed in the least costly way

What type of curve illustrates the


label below?

Increasing
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Increasing
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Zero
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Zero
opportunity
cost
per unit of
good B

improbable

What type of curve illustrates the


label below?

Constant
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Constant
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Decreasing
opportunity
cost
per unit of
good B

What type of curve illustrates the


label below?

Decreasing
opportunity
cost
per unit of
good B

Impossible;
not
supported
by
economic
theory

What trade-offs are


involved?
Why is the PPC
concave?
What does point (E),
inside the PPC
illustrate?
What is the
significance of point
(F), outside the PPC?
Under what conditions
can point F be
reached?

Moving from point B


to point A, could
eventually expand
the frontier from
G,G to H,H