Production possibility curve:-
It is defined as a representation of other combinations of goods and services can economy produce. It determines the production possibility models. This curve is used to describe a society choice between two different goods. In this curve, we have to take only two goods because we cannot represent the more number of goods. The other name for this curve is production possibility frontier.
Example:-
It is defined as a representation of other combinations of goods and services can economy produce. It determines the production possibility models. This curve is used to describe a society choice between two different goods. In this curve, we have to take only two goods because we cannot represent the more number of goods. The other name for this curve is production possibility frontier.
Example:-
Suppose If we take XYZ company is famous for selling shoes and watches.Resources for this two products are fixed. The company can produce more number of shoes and more number of watches. It doesn't produce the single watch and single pair shoe. So that company get more demand for shoes and watch it will increase the production of goods as compared to previous. Then it will compare it to forgone productions and the cost of the product and increased profit.
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