The following points highlight the seven applications of Production Possibility Curve (PPC). The applications are: 1. Scarcity 2. Opportunity Cost 3. Specialisation 4. Marginal Decision Making 5. The Irrelevance of Sunk Costs 6. Economic Growth 7. International Trade. Application # 1. Scarcity: Since resources are scarce, only limited quantities of goods and services can be produced. However, resources have alternative [...]
In this article we will discuss about the meaning of a production possibility curve. Suppose a farmer has one input with which he can produce two products namely Y1 and Y2. We assume that the other inputs are highly specialized and can be used for producing a specific crop only. So, problem of their allocation over various crops does not [...]
The following points highlight the six main uses of the production possibility curve. The uses are: 1. Unemployment 2. Technological Progress 3. Economic Growth 4. Present Goods Vs. Future Goods 5. Economic Efficiency 6. Economizing Resources. Production Possibility Curve: Use # 1. Unemployment: If we were to relax the assumption of full employment of resources, we can know the level [...]