Assumptions and Shapes of the PPC
What Is Economics? Scarcity, Choice, and Economic Models
AO2·AO4·Diagram required
Syllabus requirement
Distinguishes increasing versus constant opportunity costs and explains the assumptions underlying the model.
Assessment objectives
AO2 Application and AnalysisAO4 Use of Appropriate Skills
Required diagram: Two PPCs: one straight-line for constant opportunity cost, one bowed-out for increasing opportunity cost.
Summary
The production possibilities curve (PPC) shows the maximum combinations of two products an economy can produce when resources are used efficiently, and it illustrates scarcity and choice because producing more of one good requires sacrificing some of the other. The PPC relies on simplifying assumptions (two goods, fixed factors, constant technology, full employment) and can be drawn as a straight line for constant opportunity cost or bowed-out for increasing opportunity cost; the slope (MRT) measures the trade-off between the two goods.