Production Possibilities Curve (PPC)
Definition
The production possibilities curve represents the maximum combination of goods or services that can be produced given limited resources and technology.
Analogy
Imagine you have a fixed amount of time after school. You can either spend it studying for your exams or playing video games. The production possibilities curve shows all the possible combinations of study time and game time you can choose from.
Related terms
Opportunity cost: The value of the next best alternative foregone when making a choice.
Efficiency: Achieving the maximum output possible with given inputs or resources.
Trade-off: Giving up one thing in order to gain something else.
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