What does a production possibilities curve represent?
The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.
Which of the following is true of the production possibilities curve?
Which of the following is true of a production possibilities curve? It reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources.
Why is the production possibility curve so important?
The production possibility curve shows you the point of production efficiency. Efficiency is important because we face limited resources. Not all goods can be produced with available resources. And we must choose which output we should produce and how much.
What do you mean by Production Possibility Frontier?
Key Takeaways. In business analysis, the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources. The PPF demonstrates that the production of one commodity may increase only if the production of the other commodity decreases.
Which is an example of a production curve?
The curve shows the maximum output of various goods that a company can produce when all its resources are fully utilized. For example, a company can operate a production line capable of producing passenger cars and trucks. Producing more passenger cars means sacrificing the opportunity cost of having to produce fewer trucks.
Why do leaders want to move the possibilities curve to the right?
An economy’s leaders always want to move the production possibilities curve outward and to the right, and can only do so with growth. They must create more demand for either or both products. Only after that occurs can more resources can be used to produce greater output.