LRAS vs PPC

By Cayli Cheeks

AP Macro - "Habits" Parody on PPC and LRAS

Long Run Aggregate Supply Curve (LRAS)

  • Vertical Line
  • Located at an output level where all of the goods and services a nation can produce are being produced as efficiently as possible
  • At full employment
  • Does not change as price level changes
  • Developing more resources or better production techniques shifts the curve outward but it remains vertical
  • Represents a point on an economy's production possibilities curve
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Production Possibilities Curve (PPC)

  • Maximum possible combinations of two types of goods an economy can produce when the economy is fully employing all of its resources in a given time period
  • Resources are fully employed and are being used in the most efficient way
  • All resources are fixed
  • Measures the efficiency in which two commodities can be produced together
  • Helps managers and leaders decide what mix of commodities are most beneficial
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AP Macroeconomics (PPF)(LRAS)