what is a ppc economics

A Production Possibility Curve (PPC) is a graphical representation of all the possible options of output for two goods that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time. The PPC illustrates several economic concepts, such as allocative efficiency, economies of scale, opportunity cost (or marginal rate of transformation), productive efficiency, and scarcity of resources. From a macroeconomic perspective, the PPC illustrates the production possibilities available to a nation or economy during a given period of time for broad categories of output. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable. The PPC illustrates tradeoffs and opportunity costs when producing two goods, and it can be used to illustrate scarcity, efficiency, opportunity costs, and gains from trade.