A production possibility curve (PPC), also known as a production possibility frontier (PPF), is a graphical representation of the alternative combinations of goods and services that an economy can produce given its available resources and technology. The curve illustrates the maximum amount of one good that can be produced for every possible level of production of the other good, assuming that all resources are being used efficiently. The PPC is a decision-making tool for managers deciding on the optimum product mix for the company.

Key features of the PPC include:

• Opportunity cost: When producing goods, opportunity cost is what is given up when resources are taken from one product to produce another. The maximum amount that can be produced is illustrated by a curve on a graph.

• Efficiency: The PPC demonstrates whether resources are being used efficiently and fully when everything else remains constant. Thus, the variables can be changed to show the effects of different policies or events.

• Scarcity: An economys factors of production are scarce; they cannot produce an unlimited quantity of goods and services. The PPC assumes that the economy can produce only two goods and that the quantities of factors of production and the technology available to the economy are fixed.

The PPC is a useful tool for understanding the trade-offs that an economy faces when deciding how to allocate its resources. By illustrating the opportunity cost of producing one good in terms of the other, the PPC can help managers and policymakers make informed decisions about how to allocate resources to maximize efficiency and productivity.