LIJIT SEARCH

Production Possibility Curve (PPC)

Production Possibility Curve is a graphical representation of alternative production possibilities facing an economy. A PPC is a graphical illustration of all combination of goods and services that can be produced in a given economy at a given time, if all the available resources in the economy are fully and efficiently employed.

As the total productive resources of the economy are limited the economy has to choose between different goods. The productive resource can be employed for the production of various alternative goods. It has therefore, to be decided which goods are to be produce more and which ones less.

Assumptions:
  1. Economy is produces two goods.
  2. Full employment of resources is assumed.
  3. Time period is given and constant.
  4. Factors of productions are given and constant.
  5. Production techniques is given and constant.

PPC Schedule

Production possibilities schedule shows the different combination of different goods with the given technology and factors of production. Let us assume that the economy is producing only two commodities: consumer goods and capital goods.

From the above table, if all the available resources are allocated to produce consumer goods, an economy can produce is 15 units at combination A with the limited resources, increase the capital goods production consumer goods will be sacrificed. Due to the increased opportunity cost of consumer goods an economy increase capital goods production rather than consumer goods. Lastly, if all the available resources are allocated to produce capital goods, an economy can produce 5 units at combination F.

If we join all these point of production possibilities a graphical representation of production possibility scale comes out in a curve then it is known as production possibility frontier.

PPC is a curve showing all possible combination of two goods that a country can produce within a specified time period with all its resources fully or efficiently employed. It is always concave to the origin.

The PPC also called transformation curve because in moving from one point to another on it, one good is 'transformed' into another not physically but by transferring resources from one use to the another.

Points Inside and Outside PPC

With the given resources being fully employed and utilized can lie anywhere on the PPC but not inside or outside of it.

For example, the combined output of two goods purchased can neither at G not at H. This is so because at point G the economy could not be utilizing its resources fully and the output of two goods represented by H given the productive resources would lie beyond the capacity of the economy to produce.

Outside Shift in PPC

If the productive resources expand or increase, the PPC will shift outward to the right showing that more of both goods can be produce than before. Technological progress by improving productive efficiency allows the society to produce more of the both goods with a given and fix amount of resources.

On PPC n'f', the economy can produce more goods than on curve AF. The PPC shift outward with the growth of the economy because of:

  1. The increase in the amount of capital.
  2. The increase in the amount of natural and human resources.
  3. Progress in technology.

19 comments:

Assumptions are explaining good which is providing a great informative article that shows the excellent detailed explanations continuously.

Digital Marketing Company in Chennai

 

This blog giving the details of technology. This gives the details about working with the business processes and change the way. Here explains think different and work different then provide the better output. Thanks for this blog.
Software Testing Training in Chennai
Software Testing Training Institute in Chennai with Placement

 

What the fuck i didn't understand anything

 

Nice post!!Thanks for share PPC service.
SMO Company

 

kindly explained more about biased and unbiased shift since ppf shows production of 2 commodities at efficient use of production means

 
This comment has been removed by the author.
 
This comment has been removed by the author.
 
This comment has been removed by the author.
 

My spouse and I stumbled over here different website and thought I may as well check things out. I like what I see so now i'm following you. Look forward to looking over your web page yet again. 網上廣告

 

Hi thanks for sharing this post if you wanna know about the ppc marketing then visit the link.

 

I loved devouring the content allocated by you. I really admire the way you share this beneficial details in a considerable manner. Thank you for sharing your knowledge.
Website Design Company in Lucknow | Website Redesign Services

 

I really appreciate the blog and the knowledge of the admin. Thanks for posting it. The IT Company and its services are really helpful to the merchant for the business development. The demand of IT services are increasing day by day.

SEO Company in Lucknow | IT Company in Lucknow

 

It’s really usefull your post.Thanks for sharing such beautiful information with us. I hope you will share some more information about Configure Gmail and Domain. Please keep sharing!

seo plan

 

Can't find diagram and table only explaination

 

Thank you for sharing your valuable tips! This is really helpful and in-depth information! What I was looking for couple of weeks now.
Check later

 

THANK YOU FOR THE INFORMATION
PLEASE VISIT US
PPC Services in Bangalore





 

Post a Comment

Visitors