Features of the PPC Model
What Is Economics? Scarcity, Choice, and Economic Models
AO2·AO4
Syllabus requirement
Illustrates unemployment of resources, productive efficiency, actual growth, and growth in production possibilities.
Assessment objectives
AO2 Application and AnalysisAO4 Use of Appropriate Skills
Summary
The production possibility curve (PPC) model illustrates how an economy must make choices because resources are scarce, showing opportunity cost, efficiency, unemployment of resources, and economic growth. Movements along the PPC show trade-offs between two goods while shifts of the PPC represent changes in the economy’s productive capacity. The model helps explain allocative and productive efficiency and the effects of events (for example natural disasters or technological progress) on output possibilities.