With regard to a production possibilities curve, how is a point on the curve different from a point below the curve or a point above the curve?

Asked on by Mizdee

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

I assume that you are asking about production possibilities curves/frontiers.  I have edited your question to reflect this.

A production possibilities curve (PPC) shows what outcomes are efficient in a given economy.  It shows what combinations of two kinds of products the economy can produce.  In a PPC, the curve shows the maximum possible output.  A point on the line is something the economy can achieve if it uses all of its resources as efficiently as possible.  A point below the curve is inefficient.  The economy could produce more than that if it were being run more efficiently.  A point above the curve is impossible in the current circumstances.  The economy would need more resources in order to achieve that outcome.


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