Production+Possibility+Curves+(PPCs)+-+Generally

The Production Possibilities Curve, also known as the Production Possibilities Frontier, is an economic graph that compares the production of two different goods or products. Usually the graph measures the efficiency of the economy or market in which the two goods belong. There are three types of PPCs: increasing, constant and decreasing. These terms represent the opportunity cost of producing one of the goods in the PPC over the other, and the opportunity cost is usually giving up some production of the alternate good. In an increasing PPC increasing the production of one good, or moving along the curve, increases the opportunity cost of not producing the other good. In a constant PPC increasing the production of one good has no effect on the production of the other. A decreasing PPC, which is very rare, means that increasing the production of one good also increasing the production of the other. The most common is the increasing Production Possibilities Curve, and the curve appears in a convex bow shape; here is a good example of an increasing PPC: This specific PPC compares the quantity of guns produced (y-axis) and the quantity of butter produced (x-axis). As in all increasing PPCs a point outside of the curve represents a very efficient and desirable point, but also one that is unattainable due to limited resources, in this graph that point is represented by point X. Points B, D, C are on the curve itself which means that those points are attainable and at maximum efficiency. Any points that are inside the curve represents that production is not at maximum efficiency, and is represented by point A in this graph. These PPCs are useful because they can easily show and compare the efficiency of creating two goods, while also showing the opportunity costs and trade-offs.
 * Production Possibilities Curves - Generally**

media type="youtube" key="W0f4D__-evk&hl=en&fs=1" height="344" width="425" This is a video clip of a news broadcast that highlights the effects of unemployment on a community's local economy. The unemployment sets this community below the PPC, and the resulting slump in the economy is a clear result of its inefficiency.

LINKS TO OTHER SITES: [|Production Possibilities Curve SlideShow] [|PPC- Wikipedia] [|In Depth Example of PPC]

Question: TRUE/FALSE- A point lying on the PPC that is closer to the axis labeled "Capital Goods" is preferable to a point on the PPC closer to the other axis labeled "Consumer Goods" if the country is interested in maximizing growth later in the future.

[|Answer]