Question

What is meant by production possibility curve? Illustrate the central problem of 'what to produce' using this curve.

Answer 1

Production possibility curve shows all different attainable combinations of the production of two commodities that can be produced in an economy with given the resources and technology which are to be fully utilized.

The central problem of "what to produce?" which is faced by the economy where the economy decides the goods that needs to be produce in the economy to satisfy human wants.