Resources are finite in all economies... from land and labour to capital and technology. So, when a country decides on its strategy, it must also decide how to allocate these limited resources across competing activities. This is therefore an optimisation problem; how can we achieve the greatest possible outcome given the constraints?

Let's simplify and pretend that our economy is a two-good economy, where you can either manufacture easels or produce oil. If all the resources were dedicated to the manufacture of easels and no resources were allocated for oil production, the economy would produce a maximum of 200 easels. Vice versa, i.e., if all resources were allocated to the production of oil only, there would be 170 units.

These are the trade-offs and can easily be visualised with a Production Possibilities Curve (PPC), shown below. The PPC is a basic and fundamental economic concept and it shows the maximum combination of two goods that can be obtained with limited resources and technology. Along the curve of the PPC, resources are used at full productive efficiency. Producing more of one good can be achieved by producing less of the other, because of the limitation in resources. This is the opportunity cost. In the example below, if I produce an additional 20 units of oil, the opportunity cost is 15 easels less.

But the question is what if society wants to become more productive? As we have seen before with the resources at our disposal, it is simply not possible to "go beyond the curve". This is only achieved through economic growth, typically driven by things such as investment in capital goods or technical advancement.

So, society decides to forego producing easels in favour of new technology or new equipment, as this decision will, in the future, increase the productive capacity of the economy (therefore "moving beyond the curve"). The decision to do this has what we call distributional implications, in the sense that such decisions (e.g. whose consumption is being reduced now and who will benefit in the future), are not evenly distributed amongst societies. For instance, an artist might prefer to have his easels now, whereas a mother with young children might prefer to forego the easels. Economics is not a simple matter of numbers and models, but there is also ethical, policy considerations as well as the preference of society.

To conclude, the Production Possibilities Curve (PPC) mirrors the logic of modelling and simulation itself, where you define your constraints and explore the feasible space, you evaluate trade-offs between competing objectives and use analysis to inform strategic choices. Understanding such economic fundamentals help frame simulations not just as computational exercises but as decision-making tools grounded in the real-world dynamics of scarcity, efficiency and growth.