production possibility curve with diagram

 Production Possibility Curve

Production possibility curve or production possibility Frontier represents graphically alternative production possibilities facing an economy.  it is also called opportunity set. production possibility curve shows different combinations of two goods which can be produced with the given resources on the assumption that:

1) resources are fully and efficiently utilised.

2) techniques of the production remains constant

            The production possibility curve is a curve showing alternative production possibilities of two goods with the given resources and techniques of production. it is also called production possibility boundary. thus we conclude that with full employment and working with production efficiency,  an  economy must always give up something of one good to obtain some more or another.

the combinations of two words lying inside the production possibility curve are attainable. As can be seen in the figure,the combination "A" is attainable while as combination "x" can not be attained.



(blog 5)