What is PPC?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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I assume that you are asking about a PPC in the context of economics.  If so, “PPC” stands for production possibilities curve.  This is a curve that shows the combinations of two goods, or two types of goods, that a model economy can produce.  The PPC is meant to illustrate a variety of economic concepts.

The graph that represents a PPC has one good or type of good on each of its axes.  Each point on the graph, then, represents a different combination of these two goods.  The PPC itself is a curve on that graph.  This represents the maximum capability of the hypothetical economy given its current levels of technology and resources.  Any point on the PPC represents a level of production that is only possible when the economy operates at peak efficiency.  Any point within the PPC represents a level of production that is inefficient while any point outside the PPC is impossible given the current technology and resources available.

The PPC illustrates a variety of economic concepts.  The most important of these are opportunity costs, economic growth, and diminishing returns.  The PPC illustrates opportunity costs because it shows that the economy must produce less of one good in order to produce more of the other.  It illustrates diminishing returns because, as one makes more and more of Good A, one must give up more and more of Good B to get the same increase in the production of Good A.  Finally, it illustrates economic growth because it shows us that economic growth occurs when an economy gains the ability to make more of both goods at the same time instead of having to give up production of one good to increase production of the other.

Please follow the link below for a more in-depth discussion of the PPC.

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