Manon's Econ Blog

Production probability curve: opportunity cost

Posted on: September 1, 2009

The Production Probability Curve is useful to understand:

  • how much of Good A we have to trade off in order to produce one extra unit of Good B
  • how much of Good B we have to trade off in order to produce one extra unit of good A
  • how much we can produce of Good B for X unit of Good A (and vice-versa)
  • how much of the two goods we can produce at the same time with the actual resources 
    (the resources being scarce, we cannot produce an infinite amount of both goods) 

We can calculate the opportunity cost and understand the “trade off” looking at the PPC. All possible choices are represented on the PPC.

Advertisements

1 Response to "Production probability curve: opportunity cost"

as economics student we have to know all these in case

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: