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.
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 curves that are used to represent the different combinations of services and goods.
Key Takeaways
- PPF (Production Possibility Frontier) represents a country’s maximum output with its given resources. In contrast, PPC (Production Possibility Curve) represents the maximum combination of two goods a country can produce with its given resources.
- PPF is used to compare the productivity of two countries, while PPC is used to compare the production efficiency of a country.
- PPF assumes that resources are fixed, and technology is constant, while PPC assumes that resources and technology can change.
PPF vs PPC
PPF is an acronym that stands for Possibility Probability Frontier and it is a graphical diagram that shows the effects a commodity has on another one. PPC stands for Possibility Probability Curve and it is a diagram that shows how one commodity affects another commodity in an economy.
PPF, also called the Possibility-Probability frontier, is a graphical representation 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 and 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 how much will each of the goods will be produced when the resources are less or more. It is considered one of the efficient ways to represent resources.
Cost, trade etc. PPC portrays the standard of living. The inefficiency in PPC may be due to depression or recession.
Comparison Table
| Parameters of Comparison | PPF | PPC |
|---|---|---|
| Full form | Possibility-Probability Frontier | Possibility-Probability Curve |
| Representation | Linear or a Concave representation | Concave |
| Definition | Graphic representation of the effects of one commodity over another. | Another terminology is used in connection to it. |
| Shape | Linear and bulged | Bulged outwards, upwards and inwards. |
| Features | Maximum 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 a graphical representation, given the technological process.
It 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 represent the trade of the economy and individuals, organizations or companies. It is used to represent 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 open to two types.
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 are similar to PPF.
The PPC model shows the representation of one commodity over the other and what effect it has 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 represented in the curve either outwards or inwards depending upon the factors and what equation they will form. Sometimes criticized for being unrealistic and oversimplified.
PPC also assumes the wants of the people as unlimited and resources are 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 also has an advantage when comparing two commodities because it remains constant and stable.
After all, change is very small.
Main Differences Between PPF and PPC
- The full form of PPF is Possibility-Probability Frontier. The full form of PPC is Possibility-Probability Curve.
- The representation of PPF is Linear and Concave. The representation of PPC is concave.
- PPF is a graphic representation of the effects of one commodity over another. PPC is another terminology is used in connection to it
- The shape of PPF is linear and bulged. The shape of PPC is bulged upwards, inwards and outwards.
- 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.
- https://link.springer.com/chapter/10.1007/978-3-540-39619-2_1
- https://www.sciencedirect.com/science/article/pii/S0950705113001755
Last Updated : 11 June, 2023
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Sandeep Bhandari holds a Bachelor of Engineering in Computers from Thapar University (2006). He has 20 years of experience in the technology field. He has a keen interest in various technical fields, including database systems, computer networks, and programming. You can read more about him on his bio page.
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The article effectively explains how PPF and PPC are used to represent different economic concepts.
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