Production possibility graph

Law of Increasing Opportunity Cost

• When the resources are shifted from making one goods or services to another, the cost of producing, the second items increases.
• This occurs because not all resources are equally suited for production of all goods or services.

Four Keys Assumption of Production Possibility

1. only two products can be produced
2. full employment of resource
3. Fixed resources
4. Fixed technology

Production possibility graph                                      Point A-Inside the curve,attainable but inefficient. 

  This video shows you how to read a (PPG)

usually caused by famine, war, and unemployment

Point B&D- on the curve, attainable and efficient

Point C- outside the curve. Unattainable. Caused by Technology and economic growth