Keyword Analysis & Research: production possibility curve in economics

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What are the assumptions of the production possibility curve?

The production possibility curve is based on the following Assumptions: (1) Only two goods X (consumer goods) and Y (capital goods) are produced in different proportions in the economy. (2) The same resources can be used to produce either or both of the two goods and can be shifted freely between them. ADVERTISEMENTS:

What is an example of a production possibility curve?

The guns and butter curve is the classic economic example of the production possibility curve, which demonstrates the idea of opportunity cost.

What is meant by production possibilities curve?

production possibility curve. A graphical representation of the alternative combinations of the amounts of two goods or services that an economy can produce by transferring resources from one good or service to the other.


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