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Opportunity cost here measures how much an additional unit of one good costs in units forgone of the other good. The curve illustrates that increasing production of one good reduces maximum production of the other good as resources are transferred away from the other good.
[edit] Productive efficiency, opportunity cost, and allocative efficiency
The production possibilities curve shows the maximum feasible (obtainable) amount of one commodity for any given amount of another commodity, as of the society's technology and the amount of factors of production available. The concept is used to show the options open to a firm, individual, household, or economy for a 2-good world...
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