The Production Possibility Curve is an analytical tool presenting the alternative production possibilities of an economy. It is used to explain the central problems of an economy and how they are solved.
In the diagram:
1. Point A indicates the efficient utilization of available resources.
2. Point B shows that the available resources of the economy are not fully utilized. In other words, it is an indication of the underutilization of resources.
3. Point C is outside the Production Possibility frontier. This means that the economy cannot produce at this point using the available resources.
