Production Possibility Curve (PPC)

Constructing a PPC table


 

 

The data for a production possibility curve are based on the following:

  • 2 products, blankets and pillows, are produced
  • A fixed amount of labour and capital (machines)
  • There are 6 workers

Varying the amount of labour allocated to the production of pillows and blankets different combinations of pillows and blankets that can be produced are given in the tabale.

If 6 workers are allocate to the production of pillows and 0 workers to the production of blankets 50 pillows are produced and 0 blankets. This is indicated by combination A.

If 5 workers are allocated to the production of pillows and 1 worker to the production of blankets the production is 47 pillows and 1 blanket. This is indicated by combination B.

If 4 workers are allocated to the production of pillows and 2 workers to the production of blankets the production is 42 pillows and 2 blankets. This is indicated by combination C.

Combination D shows that 3 workers are allocated to pillows and 3 to blankets. The production is then: 35 pillows and 3 blankets.

Combination E shows that 2 workers are allocated to pillows and 4 to blankets. The production is then: 20 pillows and 4 blankets.

Combination F shows that 0 workers are allocated to pillows and 6 to blankets. The production is then: 0 pillows and 5 blankets.

 

 

 

 

 

  Labour
Pillows
Labour
Blankets
Quantity
Blankets
Quantity
Pillows
A
6
0
0
50
B
5
1
1
47
C
4
2
2
42
D
3
3
3
35
E
2
4
4
20
F
0
6
5
0
 

 

 

The production possibility curve indicates the combinations of any two goods or services that are  attainable when the society's resources are fully and efficiently employed.