Besides these limits, there are many alternatives possibilities of production of milkshake and butter. On the other hand, if production is obtained under ‘F’ combination, then 250 units of butter will be produced without any production of milk-shake. The above schedule shows that if production is carried out under ‘A’ combination, then 500 units of Milk-shake alone will be produced without any production off butter. Moreover, If the producer produces both the goods, then within these limits, various combinations can be produced. On the other hand, if all the resources are used for the production of butter only, then 250 units of butter can be produced. If all the resources are used for making milkshake alone, then 500 bottles of milkshake can be produced. Suppose, a producer decides to produce only two goods namely, milkshake and butter with the available resource “cow’s milk” and given technology. For example, apples and wheat or capital goods and consumer goods.
It is assumed there are only two goods or two sets of goods are produced in the economy.There is neither any improvement nor innovation in technology.The given resources are utilized fully and efficiently.They can be transferred from one use to another to some extent. The number of factors of production is given and assumed as fixed.“Production Possibility Curve is that curve which represents the maximum amount of a pair of goods or services that can be produced with an economy’s given resources and technique assuming that all resources are fully employed.” Assumptions : In other words, one commodity is transformed into another. This curve is also called Transformation Line or Transformation Curve because it indicates that if more of a commodity is to be produced then factors of production will have to be withdrawn from the production of another commodity. Therefore, It is also known as Production Possibility Boundary or Production Possibility Frontier. Also, this curve shows the limit of what it is possible to produce with available resources. It is a curve showing different production possibilities of two goods with the given resources and technique of production. Properties of PPC: Meaning of Production Possibility Curve: Unimax Publications Book’s Solution – PSEB.Usha Publication Book’s Solution – PSEB.
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PRODUCTION POSSIBILITY CURVE DIAGRAM PROFESSIONAL
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