EC 1 UCLA Dr. Bresnock Lecture 2Production Possibilities Curve(PPC) – shows the maximum combinations of two products that can be produced in a full employment, full production economy at a point intime. The following assumptions apply when constructing a PPC: 1.Full employment and productive (or technical) efficiency 2.Fixed resources 3.Fixed technology 4.2 different goods – for simplicity Ex.Pizza or Robots Production Alternatives Type of Product ABCDEPizza0 1 2 3 4 Robots 10 9 7 4 0 The information given in the table will plot onePPC given the above assumptions. Graph 1Production Possibilities CurveAs we move downthe PPC from Point A to Point E note the following: LossGainFrom A to B From B to C From C to D From D to E
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