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Opportunity Cost
This is the cost of the best alternative that is given up when a decision is made. This can be applied to products that we buy, the jobs that we undertake and the products firms decide to make. Private firms generally base their decisions according to which product will maximise their profit.
The Production Possibility Curve indicates the points at which resources are being used efficiently. Any point to the left of the curve means that resources are not being used to their potential.
It is also known as the Opportunity Cost Curve as it shows the opportuntiy cost of producing more of one product.
