Difference Between PPF and PPC (With Table)

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Economics is the subject that is used for the production, distribution and consumption of goods and services. Economics mainly focuses on the interactions and behaviour of economic agents and how do they work. There are two branches of economics. Microeconomics and Macroeconomics.

Microeconomics studies basic things like the elements of the market, its interactions, outcomes etc. While Macroeconomics studies or analyzes different factors that can affect the economy like land, labour, capital, inflation, economic growth, currency etc.PPF and PPC are types of the curve that are used to represent the different combinations of services and goods.

PPF vs PPC

The difference between PPF and PPC is that PPF is called Product-Possibility Frontier while PPC is called Product Possibility Curve. PPF is used to represent the different commodities in economics in a graphical way. PPC is also the same thing, but here the graph represented is in the curve. In PPF, the graph is linear in direction.PPC is considered as a good method to represent the maximum output of the goods, which sometimes becomes difficult in PPF.

PPF, also called Possibility-Probability frontier, is a graphical representation that is used to represent the kinds of goods and services in various combinations. PPF is a whole that consists of PPC as well. PPF is used to represent various economic concepts like economies of scale, opportunity cost, allocative efficiency, reproductive efficiency, and scarcity of resources. PPF can be represented in many ways, from bulging downward, inward, upward or linear.

PPC in economics means Production Probability Curve. It is the visual representation of the most efficient production, i.e. goods and services. It is a part of PPF. It is very similar to PPF. The points on the curve represent that how much will each of the goods will be produced when the resources are less or more. It is considered as one of the efficient ways to represent the resources, cost, trade etc. PPC portrays the standard of living. The inefficiency in PPC may be due to depression or recession.

Comparison Table Between PPF and PPC

Parameters of ComparisonPPFPPC
Full formPossibility-Probability FrontierPossibility-Probability Curve
RepresentationLinear or a Concave representationConcave
DefinitionGraphic representation of the effects of one commodity over another.Another terminology is used in connection to it.
ShapeLinear and bulgedBulged outwards, upwards and inwards.
FeaturesMaximum possible output combinations.Models a two-good economy.

What is PPF?

PPF represents the maximum capacity of both goods and services an economy can achieve. It can be represented via PPF. PPF can make the graphical representation given technological process is fixed, and the natural resources are fixed.PPF can be represented via any shape, and it can be bulged outwards, upwards and inwards. It can be in linear representation as well. 

On the PPF, if there is no increase in productive resources, then the production of goods and services will decrease. Points on the curve represent the trade between different types of goods and services. The trade on the PPF can be used to represent the trade of the economy and also individual’s, organizations or companies. 

So it is used to represent all the spheres where goods and services are to be found. One good can be diverted to produce the other well only by producing the less first good so that PPF can be balanced. In Microeconomics, PPF is opened to two types, i.e., firm in a two good world, household or an individual.

What is PPC?

PPC is a part of PPF. PPC is the other name for PPF. the concepts used in PPC is similar to PPF. PPC model shows the representation of one commodity over the other and what effect has it on the other. Whether it will be increased or decreased. 

In the PPC model, it is not only restricted to goods but can also be used to represent the productive efficiency of the services. It can take the shape of a concave curve. PPC is usually represented in the curve either outwards or inwards depending upon the factors and what equation will be formed by them.

Sometimes, PPC is criticized for being unrealistic and oversimplified. PPC also assumes the wants of the people as unlimited and resources to be limited so that it can find alternative options. IN PPC, only two commodities are compared for the whole economy. That makes it difficult sometimes to be realistic. PPC has an advantage as well when two commodities are compared because it remains constant and stable. After all, change is very small.

Main Differences Between PPF and PPC

  1. The full form of PPF is Possibility-Probability Frontier. The full form of PPC is Possibility-Probability Curve.
  2. The representation of PPF is Linear and Concave. The representation of PPC is concave.
  3. PPF is a graphic representation of the effects of one commodity over another. PPC is another terminology is used in connection to it
  4. The shape of PPF is linear and bulged. The shape of PPC is bulged upwards, inwards and outwards.
  5. The feature of PPF is the maximum possible output combinations. The feature of PPC is that it models a two-good economy using the x and y-axis.

Conclusion

Both PPF and PPC are used in Economics. The field of economics is very difficult. Because there are lots of factors that need to be understood by economists and predict the outcome based on it. For that, they use different types of calculations and graphs. Factors include Laws of supply and demand, factors of production, allocable resources, opportunity costs, scarcity etc. All of these terms are used in both Micro and Macroeconomics. PPC and PPF play an important role in both branches to predict the probability of the outcomes.

Both are very commonly used when it comes to the visual representation of two commodities and their effects on each other. PPF is used to accommodate all the maximum possible out6comes. One of the names of PPF is PPC. Because PPC is a sub-category of PPF.

References

  1. https://link.springer.com/chapter/10.1007/978-3-540-39619-2_1
  2. https://www.sciencedirect.com/science/article/pii/S0950705113001755
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