Production possibility curve diagrams
Introduced| English | Meaning |
|---|---|
| production possibility curve/prəˈdʌkʃn ˌpɒsəˈbɪlɪti kɜːv/ | A boundary showing the maximum feasible combinations of two outputs using given resources and technology efficiently. |
| trade-off/treɪd ɒf/ | A choice that involves giving up some benefit or objective to gain another. |
| efficient/ɪˈfɪʃənt/ | Using resources without avoidable waste, or allocating them to maximise the relevant net benefit. |
| unemployed/ʌnemˈplɔɪd/ | unemployed |
| economic growth/ˌiːkəˈnɒmɪk ɡrəʊθ/ | An increase in an economy's real output of goods and services over time. |
| technology/tekˈnɒlədʒi/ | The application of knowledge, methods and tools to practical tasks. |
More guns or more butter?
- A country can use its resources to make weapons or consumer goods — but with limited resources, more of one means less of the other.
- The production possibility curve 生产可能性曲线 (PPC) draws this trade-off 取舍.
Reading the PPC
- The PPC shows the maximum combinations of two goods an economy can make using all its resources fully.
On the curve = efficient 有效率的; inside = resources wasted; beyond = impossible with current resources.
The production possibility curve
Frontier = maximum efficient combinations
The PPF is concave — a trade-off between two goods.
A point on the PPC represents an economy that is:
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On the curve = full, efficient use; inside = waste; beyond = unattainable.
Opportunity cost on the curve
- Moving along the PPC to make more of one good means giving up some of the other — that's the opportunity cost.
- A point inside the curve means resources are unemployed 闲置的 or wasted.
A point inside the PPC shows:
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Inside the curve, resources are not fully used.
Moving along the PPC to produce more of one good has an opportunity cost.
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You give up some of the other good.
Shifts: economic growth 经济增长
- The whole curve shifts outward with economic growth — more or better resources, or new technology 技术.
- It shifts inward if resources are lost (war, disaster).
Economic growth shifts the whole PPC outward; losing resources shifts it inward
Moving along ≠ shifting the curve. Changing the mix of goods is a move along the PPC; only more/better resources shift the whole curve outward.
Which shifts the whole PPC outward?
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More/better resources or technology shift the curve out; changing the mix is a move along it.
Economic growth shifts the PPC ______.
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More capacity moves the whole curve outward.
You've got it
- the PPC shows max output combinations: on = efficient, inside = wasteful, beyond = unattainable
- moving along it has an opportunity cost
- economic growth shifts the whole curve outward