PRODUCTION POSSIBILITY CURVE
A production–possibility frontier (PPF) or production possibility curve (PPC) is the possible trade-off of producing combinations of goods with constant technology and resources per unit time. One good can only be produced by diverting resources from other goods, and so by producing less of them. This tradeoff is usually considered for an economy, but also applies to each individual, household, and economic organization.
This is example of production possibility curve. We can easily see that as we increase the production of guns we have to decrease the production of butter.
In real life every manufacturing company use this concept if we take example of “BAJAJ” earlier they use to manufacture scooters but as the trend change and they started manufacturing bikes. So, as they produce more units of bikes they have to increase the production of scooter and as time goes the production of scooter comes zero and 100 % of production of bikes has started.
But after some time technology change then again the production of heavy bikes is started and production of light weight comes down . So, as we produce one more heavy bike then we have to reduce the production of. Light weight bikes.
So, as we can observe that more and more units of one good we have to decrease the production of other goods because resources are limited.
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