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16 February, 13:41

What is the purpose of the production possibility curve?

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  1. 16 February, 17:11
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    The purpose of this curve is to present the combinations of two goods that can be produced by the given resources and techniques.

    Explanation:

    The production probability curve (PPC) shows the different and best combinations of two goods that are produced by the given resources. The slope of this curve is downward (right to the left and top to the bottom).

    It simply means, if the producer or manufacturer wants to increase the production of one (suppose x) good then he has to decrease the production of another good (suppose y). This state also affects the marginal opportunity cost by increasing it.
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