Q4Managerial Economics & Financial Accounting
Question
2 marks
Define production possibility curve.
Answer
The PPC shows the maximum possible combinations of two goods an economy can produce given fixed resources and technology.
The Production Possibility Curve (PPC), also known as the Production Possibility Frontier, is a graphical curve that shows all the various maximum possible combinations of two goods that an economy can efficiently produce.
It assumes that all available resources are fully utilized and the state of technology is constant.