Production possibilities curve

Learning objectives

Draw a production possibilities curve (PPC) and use it to show scarcity, trade-offs and opportunity cost between two goods

Classify points inside, on and beyond the PPC as inefficient (unemployed resources), efficient or currently unattainable

Calculate the opportunity cost of one more unit of a good from a PPC, and explain why a bowed-out curve shows increasing opportunity cost while a straight line shows constant opportunity cost

Explain outward shifts of the PPC (economic growth) caused by more resources or better technology, and inward shifts caused by losing resources

Interpret a PPC for capital goods versus consumer goods and explain how today's choice affects future growth