Opportunity Cost and Production Possibility Curve

Opportunity Cost

Next best alternative forgone when choosing another option

PPC

A curve that shows the maximum output of two types of products and a combination of these products that can be produced with current technolody and resources

Movements on the Curve

How resources are reallocated between the two products

Points on a Curve

• Under a Curve - Resources are not completely used to its potential

• On the Curve - Resources are completely employed

• Above the Curve - Not enough resources to produce this output above its capacity

Shift on a PPC

Due to an increase in Quality and quantity of resources it increases the productive potential and increases potential growth