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1.4 Production possibility curve (PPC) diagrams

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Production possibility curve (PPC) diagrams  IGCSE Economics Notes 2024/2025/2026 Exams

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Production Possibility Curve (PPC)

Summary Fill in the Blanks

Click the highlighted blanks to reveal key definitions and ideas. Word choices are included where they help students identify the accepted answer.

1 What is a PPC?

The PPC shows the
________________ maximum possible output
of two types of products.
This output is based on existing
________________ resources and technology
.
The PPC illustrates
________________ trade-offs
between the production of different goods.
Accepted words: (
________________ PPC / Production Possibility Curve
)

2 Point under the PPC

A point under the PPC shows
________________ under-utilisation of resources
.
This means some resources are
________________ unemployed
or not fully used.
So production is
________________ inside
the PPC rather than on it.

3 Point on the PPC

A point on the PPC represents
________________ maximum utilisation of resources
.
This means all resources are being used
________________ efficiently
.
A point on the curve shows
________________ full use
of available resources.

4 Point above the PPC

A point above the PPC is
________________ unattainable
with current resources and technology.
There are not
________________ enough resources
to produce at that point.
So production outside the curve cannot be achieved at the
________________ present time
.

5 Movement along the PPC

Any movement along the PPC represents the
________________ reallocation of resources
from one good to another.
If more resources are used to make office furniture, production of
________________ school furniture
will decrease.
This shows that producing more of one good usually means producing
________________ less of another
.

6 Bowed-out PPC

A bowed-out PPC is the
________________ common shape
of the curve.
When output of one product increases, output of the other product
________________ decreases
.
This shape shows
________________ opportunity cost
.

7 Straight-line PPC

A straight-line PPC is a
________________ rare case
.
It happens when resources can produce both products
________________ equally
.
This means the opportunity cost remains
________________ constant
.
Accepted words: (
________________ constant opportunity cost
)

8 Shifting the PPC outward

The PPC can shift outward when there is an increase in
________________ resources
.
Examples include more labour or more
________________ capital
.
The PPC can also shift outward because of improvements in
________________ technology or techniques
.
On-the-job training improves worker
________________ efficiency
and resource use.

You need to know:

(a) A PPC shows the maximum possible output of two goods using existing resources and technology.

(b) A point under the PPC shows under-utilisation of resources.

(c) A point on the PPC shows full and efficient use of resources.

(d) A point above the PPC is unattainable with current resources and technology.

(e) Movement along the PPC shows reallocation of resources and opportunity cost.

(f) A bowed-out PPC shows changing opportunity cost, while a straight-line PPC shows constant opportunity cost.

(g) The PPC can shift outward because of more resources, better technology, improved techniques or training.

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Syllabus Objectives

Topics:

  • 1.4.1 definition of PPC
  • 1.4.2 points under, on and beyond a PPC
  • 1.4.3 movements along a PPC
  • 1.4.4 shifts in a PPC

Guidance

  • Definition, drawing and interpretation of appropriate diagrams.
  • The significance of the location of production points.
  • Movements along a PPC and opportunity cost.
  • The causes and consequences of shifts in a PPC in terms of an economy’s growth.

Video Lectures

Note:

 

  • The video is  a preview of our revision notes
  • Note that notes get revised from time to time as per expert advice. 
  • All the IGCSE Economics Notes   are meant for revision and hence are fully downloadable as well as printable once you become a paid member.

Exam Tips

  1. Understand the PPC Curve: Be clear on the meaning of different points on the curve (under, on, and beyond) and what they represent in terms of resource utilisation.
  2. Use Real-World Examples: Explain the concept with practical examples like the production of school furniture versus office furniture to highlight trade-offs and opportunity costs.
  3. Link PPC to Efficiency and Opportunity Cost: Show how the PPC illustrates efficient resource use and the opportunity cost involved in reallocating resources.
  4. Know How Movements Affect Production: Understand how shifts along the PPC happen when resources are moved between different products, and the opportunity cost involved.
  5. Explain PPC Shifts: Be prepared to discuss factors that can cause the PPC to shift, such as increased resources or improved technology.

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