Definition: The production possibility Curve (PPC) or production possibility boundary (PPB) refers to a curve or graph showing the possible combinations of commodities that can be produced in a given economy given the prevailing level of technology if all the available productive resources are efficiently utilised. The PPC which is known as the transformation Curve goes a long way in telling us that in order to produce more of another commodity, the production of a particular commodity has to be sacrificed. That is to say that the cost of getting more of a particular commodity produced is the amount of another commodity that must be sacrificed. Since the Economic resources are scarce, we have to put them into alternative uses instead if using all the available resources in the production of a particular commodity.
In all economies irrespective of the Economic ideologie adopted, the choice of what to produce, how to produce, for whom to produce and how to produce of the available resources should be used in such production constitute serious problems. These problems become exacerbated in a developing economy like Nigeria where we have to make choice either to use all our available resources in producing food crops as we are presently witnessing acute scarcity of food or to produce cash or export crops in order to improve our balance of payments that seems to be unfavourable. We shall now assume that Nigerian economy has only food and cash crops to produce. The question now is -what are their production possibilities? That is to say -how much of these two types of crops should we produce?
Since the greatness of a country can be measured by the ability of the nation to feed it's citizens and since the revolution of the stomach seems to be the greatest revolution, if we use all our available labour and capital to produce food crops on the available land in the country we may produce around 3,500 tonnes per month. At the other extreme, if we decide to use all the labour and capital to produce cash crops for export, we might produce at least 2,800 tonnes per month. It now means that we have two extreme production possibility combinations of food crops and cash crops represented by A to F in the production possibility table below:
PRODUCTION POSSIBILITY SCHEtable
It is possible to produce both crops which means there will be no extreme amount of either. For this to be possible, one will have to be sacrificed for the other to some extent. As we can see in the table above, in order to produce 600 tonnes of cash crops in combination B, 700 tonnes of food crops have to be sacrificed. On the other hand, combination F, 800 tonnes of cash crops had to be sacrificed in order to produce 700 tonnes of food crops. We can then conclude here, that the opportunity cost of producing cash crops is certain amount of food crops that must be sacrificed. Based on the figures in the above table, we can plot the graph for the production possibility Curve as shown below:
A PRODUCTION POSSIBILITY CURVE FOR FOOD AND CASH CROPS
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