PPG GRAPHS

PRODUCTION POSSIBILITIES GRAPH:   graph shows an alternative way to use an economic resource.

PRODUCTION POSSIBILITIES CURVE  curve on the graph

PRODUCTION POSSIBILITIES FRONTIER= PPG



Key assumptions about PPG:

1. full employment= 4-5% unemployed, 90% factory capacity.

2.Fixed resources: 
land, labor, capital
Fixed state of technology
No international trade
two goods are produced ( can't have more than 2 at a time.)

3 movements inside PPG

Shift inside PPC
Shift outside PPC
Shift on the PPC

Allocative & Productive Efficiency 

Allocative efficiency: products being produced are ones most desired by society.

 Productive efficiency: products being produced in the least costly way.