A consumption possibilities curve shows the combinations of two goods that can be consumed when a nation specializes in producing a particular good and trades with another nation.

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A consumption possibilities curve (also known as production possibilities curve or frontier) shows the maximum combinations of two goods that can be produced by a nation given its resources and technology. It does not consider trade with another nation. However, when a nation specializes in producing a particular good and trades with another nation, it can consume combinations of goods that are beyond its own production possibilities curve. This is shown by the terms of trade line, which represents the rate at which one good can be exchanged for another in the international market.

A Consumption Possibilities Curve Shows the Combinations of Two Goods