Why is the production possibilities curve concave? Explain

The production possibilities curve (PPC) is concave because resources are not equally efficient in producing all goods. This leads to increasing opportunity cost.

PPC shows the maximum combinations of two goods that can be produced with available resources. It is concave to the origin because shifting resources from one product to another increases opportunity cost.

• Resources are specialized and not perfectly adaptable.
• More units of one good mean larger sacrifices of the other good.
• This makes the PPC curve bowed outward, or concave.

Example

If a country produces guns and butter, using land and machines meant for farming to make weapons reduces efficiency and increases cost. Thus, more guns mean giving up much more butter.