Defferentiate between opporturnity cos and production possibility curve.

Question

Defferentiate between opporturnity cos and production possibility curve.

Answer 1

The production possibility curve shows how much of two goods an economy can produce.  Any point on the line is efficient; any point inside of the line is inefficient because not all available resources are being used; and any point outside of the curve is impossible with the given resources.  It is bowed outward because there are some resources that are specialized for producing one good, but poorly suited for producing the other.

Opportunity costs are how much you have to give up of one good to produce more of the second good.  As you produce more of one good, the opportunity costs increase.