The principal concepts in the production possibilities frontier economic model includes scarcity, choice, and tradeoffs.
<h3>What is a production possibilities curve?</h3>
It refers to the economic model that shows the maximum combinations of goods and services or any two categories of goods that can be produced from a fixed amount of resources.
The model of Production Possibilities Curve are used to show the tradeoffs associated with allocating resources between the production of two goods. It can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, contractions as well.
In conclusion, the importance of production possibilities curve is that it helped demonstrate the maximum possible output of goods given a set amount of resources.
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