A production possibilities curve shows the possible trade-off of one good for another in production under conditions of full employment.

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A production possibilities curve depicts the maximum output of two goods that can be produced with limited resources and technology. It illustrates the opportunity cost of producing one good in terms of the other. The curve assumes full employment of resources, thus all factors of production are used efficiently, and any increase in the production of one good requires a reduction in the production of the other good. Therefore, a production possibilities curve shows the trade-offs that a society faces when choosing between the production of two goods with limited resources.

A Production Possibilities Curve Shows the Possible Trade-Off of One