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प्रश्न
Discuss meaning of production possibility curve through a schedule and diagram.
आकृति
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उत्तर
Production Possibility Curve (PPC) is a curve which shows different possible combinations of two goods that can be produced with the given resources and technology, assuming that resources are fully and efficiently utilised.
|
Production Possibilities |
A |
B |
C |
D |
E |
|
Guns (Units) |
0 |
1 |
2 |
3 |
4 |
|
Butter (Units) |
10 |
9 |
7 |
4 |
0 |
Plot guns on the horizontal axis and butter on the vertical axis, then join the points representing these combinations. The resulting frontier slopes downward: producing more butter requires sacrificing guns. Under the usual assumption of increasing opportunity cost, it is concave to the origin.
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