0455
Production Possibility Curves
Basic Economic Problem · 4 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 10% of your exam marks.
stable
Medium
Stable10%
PPC diagram interpretation appears in roughly half of all Paper 2 sittings; outward shifts and opportunity cost from the diagram are the key mark points.
Topic 1 introduced the three fundamental economic questions: what to produce, how to produce it, for whom to produce it. The PPC shows the what question in pure form.
- A point on the curve represents one specific answer to "what to produce" (a particular mix of the two goods).
- Sliding along the curve corresponds to choosing a different answer, which always carries an opportunity cost.
- A whole new curve (after a shift) corresponds to a changed range of feasible "what to produce" answers.
The PPC does not directly answer the "how" or "for whom" questions; those involve choices about production methods and income distribution, neither of which is shown on the two axes.