THINK ABOUT PRODUCTION POSSIBILITY CURVES(PPC)....!!

PRODUCTION PO

SSIBILITY CURVE

INTRODUCTION OF PRODUCTION POSSIBILITY CURVES(PPC):

Hello friends , this is my second blog  and in this blog am going to sharing my knowledge about 

production possibility curves which is a part of economics. Production possibility curve represents

the data in graphical presentation about different possibilities of production of two commodities 

within limited resources. In other words , it shows the allocation of two commodities within limited 

resources.

DEFINITION / MEANING:

 "It is a locus of all the possible bundles of two goods that an economy can produce by using its technology fully and efficiently (without wastage of resources)".

SOME BASIC ASSUMPTIONS OF PPC:

1. Resources are given as constent.

2. technology are given as constent.

3. Resources are not specfic in nature.

FEATURES OF PRODUCTION POSSIBILITIES CURVES(PPC):

1. PPC is downward sloping curve 

reason:

Since resources are limited in nature so for increasing production of one commodity there is need 

sacrifice production of other commodity . Hence, PPC is downward sloping curve.

2. PPC is cocave to origin:

reasion:since, MOC is diminishing in nature so PPC is downward sloping curve (explaination of marginal opportunity cost will be explain in the conclusion .

SHIFT IN PPC:

1. Rightward shift in PPC/ outward shift in PPC :

1.when there will be upgradation in technology.

2.when there will be increase in resources.

2. Leftward shift in PPC/inward shift in ppc:

1. when there will be use of outdated technology.

2. when there will be loss of resources.

CONCLUSION:

MARGINAL OPPORTUNITY COST -  It is a cost or unit of next best alternative that has to be sacrifice for producing an additional unit of output. It is a difference between change in commodity x and commodity y.

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