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"Why can production only take place on or inside the curve?"

1 Answer

3 votes

Answer:

I suppose that you are referring to a production possibilities frontier (PPF) curve. Total production output can only take place on or inside the curve because the PPF curve gives us the maximum combination of output that we can produce of two different goods using all available resources.

e.g.

Cars Boats

100 0

80 15

60 30

40 45

20 60

0 75

If you want to produce 60 cars, the maximum number of boats that can be produced is 30. You can produce less than 30 boats, and have some spare unused resources, but you cannot produce 40 boats.

User Ajay Soman
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