Graphically describing the PPC
The Above Graph shows all the possible combinations of two goods which can be produced at any one time, given existing resources. If all resources are devoted to producing Good X, than ON units can be Produced. If however, all resources are used to produce Good Y, than OM units can be produced. If a combination of X and Y is desired than all possible combinations are shown by the line MN which is drawn convex to the origin.
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This line shows both factor combination and factor substitution. It shows how a country’s factors of production can be combined in different ways in order to vary the pattern of Output. It also shows how factors can be substituted for each other in order to produce less of one good and more of another. We also see a shift in the PPC that couldn’t possibility be the Increase in the potential capacity of country’s production. For example : Technological Factor, Increase in Capital etc showing the shift as N1M1.