What is PPC in microeconomics?
Term. Definition. production possibilities curve (PPC) (also called a production possibilities frontier) a graphical model that represents all of the different combinations of two goods that can be produced; the PPC captures scarcity of resources and opportunity costs.
Why is PPC called opportunity cost?
Production Possibility Curve is called the opportunity cost curve as it is the curve which shows the combinations of two goods and services that can be produced with fuller utilisation of a given amount of resources in the most efficient way and with a given production technology. PPC is concave to origin.
What is the other name of PPC?
Production possibilities curve (PPC), sometimes called the production possibilities frontier (PPF) (video) | Khan Academy.
What circumstances will opportunity cost be zero?
In general, opportunity cost of a resource is zero only when there is general unemployment of resources, including manpower. If there is unemployment of labour, but no idle equipment, it would be possible to build more hospitals by utilising the surplus labour.
What is the law of constant opportunity cost?
Constant opportunity cost is a situation in which the costs of pursuing a particular opportunity does not increase or decrease over time, even if the benefits derived from the activity should change in some manner.
Why is production possibilities curve concave?
Production possibility curve is concave to the origin as due to limited resources the producer have to sacrifice one type of commodity in order to produce second commodity. when a curve is concave to the origin it mean it has an increasing slope and it will shift from left to right.
How do you calculate Production Possibility Frontier?
To calculate the production possibility frontier, choose two variables to compare and create a column within the spreadsheet for each variable. After filling the columns with each variable’s values, each row will have values that represent a data set that can be compared to determine production possibility values.
What is example of production possibilities curve?
The guns-and-butter curve is the classic economic example of the production possibility curve, which demonstrates the idea of opportunity cost. In a theoretical economy with only two goods, a choice must be made between how much of each good to produce.