Explain the production possibility curve with figure

The production possibility curve is a curve depicting all maximum output possibilities for two goods, given a set of inputs consisting of resources and other factors.

The production possibility curve is also called production possibility frontier (PPF). Production possibility curve (froniter) represents graphically alternative production possibilities facing an economy.

let us suppose that the economy can produce two commoditis, cotton and wheat. We suppose that the productive resources are being fully utilized and there is no change in technology.

The following table gives the various production possibilities.

Alternative production possibilities

Productin possibilities	Cotton (in thousand quintals)	Wheat (in thousand quintals)
A	0	15
B	1	14
C	2	12
D	3	9
E	4	5
F	5	0

If all available resources are employed for the production of weat, 15,000 quintals of it can be produced. It, on the other hand, all available resources are utilized for the production of cotton, 5000 quintals are produced. These are the two extremes represented by A and F and in between them are the situations represented by B, C, D and E. At B, the economy can produce 14,000 quintals of wheat and 1000 quintals of cotton. At C the production possibilities are 12,000 quintals of wheat and 2000 quintals of cotton, as we move from A to F, we give up some units of wheat for some units of cotton. For instance, moving from A to B, we sacrifice 1000 quintals of wheat to produce 1000 quintals of cotton and so on. As we move from A to F, we sacrifice increasing amounts of cotton.

The following diagram illustrates the production possibilities set out in the above table.

In this diagram, AF is the production possibility curve, also called or the production possibility frontier, which shows the various combinations of the two goods which the economy can produce with a give amount of resources.

The production possibility curve is also called transformation curve, because when we move from one position to another, we are really transforming one good into another by shifing resources from one use to another.