The above diagram is an economic production possibility curve. The Production Possibility curve shows the amount of products that can possibly be produced at that time. If both products use the same resources - Land, Plastic, Metal. Economists must construct the above diagram to measure the possible volume of production.
Let’s say that - Vertical side is Computers & the Horizontal line is cooling fans.
If you look at the line that starts right by the letter A - & matches straight up to Letter E - you should see a square shape that states - OA to OE - that is the volume of production for Computers. If you go straight from OD - OB you can see the volume of production for Cooling fans - Make sense?
Let’s say that - Vertical side is Computers & the Horizontal line is cooling fans.
If you look at the line that starts right by the letter A - & matches straight up to Letter E - you should see a square shape that states - OA to OE - that is the volume of production for Computers. If you go straight from OD - OB you can see the volume of production for Cooling fans - Make sense?
Next we will move onto What happens when you change the level of production on the diagram - For instance - OD - OE - what would we gain & what would we lose?
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