When resources are allocated in such a way that it is possible to increase the production of one good only by decreasing the production of another, the allocation of resources is said to be a "trade-off." This concept captures the idea that due to scarcity of resources, increasing output in one area necessarily requires giving up some output in another area, reflecting opportunity costs.
This situation is often illustrated by the production possibilities frontier (PPF) or curve (PPC) in economics, which shows the trade-offs between the production of two goods. On the curve, any increase in production of one good must come at the cost of reducing production of the other good, indicating efficient allocation of limited resources.
Thus, this allocation is called a trade-off because of the direct inverse relationship between increasing one good and decreasing another. It represents a fundamental economic problem of scarcity and choice.
