Production possibility curve
PPC is defined as the curve showing the combination of two commodities that can be produced in an economy given the prevailing level of technology and economic resources, when all resources are efficiently utilized.
Assumptions of a ppc
A country has two commodities to produce
There is full employment of economic resources in the production process
There is fixity of resources
Shift in ppc
| Outward shift | Inward shift |
|---|---|
| Discovery of new resources | War and civil crisis |
| Technological advancement | Natural disasters such as Hurricane |
| Increase in the size of the labor force | Loss of economic resources |
| Investment in capital goods | Epidemics and pandemics |
| Human capital development | |
| Increase in size of the labor force |