Production possibility curve is a curve which depicts all possible combinations of two goods which can be produced with given resources and technology in an economy.
Following are the properties of a production possibility curve :
1. Downward slope – Production possibility curve slopes downward from left to right. It is so because increase in production of one commodity is possible only by reducing the production of other.
2. Concave to the origin – Production possibility curve is concave to the point of origin because of increasing marginal opportunity cost or marginal rate of transformation.
3. Shift – Production possibility curve can shift to the right or to the left. It can shift to the left when resources decrease due to large scale natural calamities, war, fall in population etc. It can shift to the right where there is improvement of technology or increase in resources.
