Production Possibility Curve (PPC)

Learn 1.3 Production Possibility Curve (PPC): Concepts, Shape and Shift in Economics with comprehensive educational content from Padandas.

Sep 11, 2026

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Production possibility Curve/ Frontier (PPC/ PPF):

The concept of PPC was illuminated by P.A Samuelson for the first time. Professor Samuelson says, " A full employment economy must always in producing one good be giving up something of another. Substitution is the law of life in a full employment economy. The production possibility frontier depicts society's menu of choices."

This curve is used as a tool to analyze the problem of choice of wants and scarcity of resources. It shows the ratios of different goods and services to be produced with the use of given limited resources.

Assumptions: 1) Only two goods are produced in an economy. 2) The factor of productions is fixed. 3) There is full employment of resources. 4) Production Technology is given and constant. 5) PPC runs in a short period.

PPC is a graph that shows various combinations of the amount of two commodities that an economy can produce per unit of time such as the number of shoes versus kilograms of butter. The table and diagram are given below to clarify about PPC.

Possibilities	Butter (Kilograms)	Shoes ( Pairs)
A	0	10
B	1	9
C	2	7
D	3	4
E	4	0

In the above table and diagram, there are different possibilities with factor combinations A, B, C, D and E. When all the resources are employed to produce shoes, then no butter can be produced in possibility A. when 1 kg of butter is produced, then only 9 pairs of shoes can be produced and so on.

When all the possibilities are connected, then we get a concave nature of curve which is known as Production Possibility Curve. The points F and G are inefficient points because they are unattainable due to limited resources and given technology. To produce at this point, the economy requires more resources or improved technology.

Shift in Production Possibility Curve

Shift in PPC

PPC shifts because of the growth of the availability of inputs such as physical capital or labor or technological progress, etc. Such a shift in PPC reflects changes in the economy. It can be expressed by the following function: Q=ƒ(𝑘l, 𝑘k)

Here, scale factor (𝑘) is taken as a resemblance of change of technology which results to shift in PPC. Shift in PPC may be outward or inward (Upward or Downward). If 𝑘 is positive, then PPC will shift outward or else inward. Sometimes, the changes may occur only in one industry out of the two which leads to the shift in PPC upward or rightward only of one industry. It can be shown by the help of following diagrams:

Shift in PPC

In the first diagram we can see the shift in PPC occurs due to the changes in inputs and technology in both the industry or goods. In the second diagram we can see the shift in PPC which occur due to the improvement of inputs or technology only in food industry.

Illustrative PPC schedule

Combinations	Bread & Butter	Guns
A	12	0
B	9	1
C	6	2
D	3	3
E	0	4

Plotting these combinations yields the PPC. Points above the curve are unattainable with given resources; points inside indicate under-utilized resources.

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