How does a production possibilities curve illustrate opportunity cost?
Production Possibilities Curve – a graph that indicates all the possible combinations of two goods or services (or aggregates of goods and services) that can be produced within an economy given the full and efficient use of all available resources.Opportunity Cost:-The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative actionmason.gmu.eduOpportunity Cost and the PPCThe production possibilities curve illustrated above has two significant characteristics:1.The PPC slopes downward and to the right. This represents the OPPORTUNITY COST of increasing the output of one good at the expense of the second good. An increase in food production requires a reduction in the production of clothing. The slope of the PPC is negative at all points on the curve. Opportunity cost is measured by the slope of the PPC (the change in along y-axis divided by the change along the x-axis). As production o
