Think of PPC as a magical graph showcasing the maximum number of two goods (like magical potions and unicorn horns, or maybe just wheat and cotton) a country can produce at a certain time with the resources and tech it has.

For instance, let's say our country makes 300 units of unicorn horns (let's call this good X). If it uses all available resources and technology, it could only make 200 units of magical potions (good Y) at the same time.

So, the PPC helps us visualize the production relationship between two goods.

Ever been to a candy shop and had to choose between your favorite candies because your pocket money was limited? That's pretty much what an economy does but with goods and resources instead of candies.

For example, if the economy wants to produce more unicorn horns, it'll have to give up some magical potions. Let's say it produces 100 more units of unicorn horns (now it's 400 units instead of 300). It can only produce 160 units of potions now, not 200. So, the 40 units of potions it had to forego, that's the opportunity cost!

The reason the economy had to give up some potions to make more unicorn horns is scarcity. If resources weren't scarce, it could make as many potions and horns as it wanted. But alas, just like candies in a shop, resources are limited.

Ever notice how the more candy you buy, the less money you have for video games? That's increasing opportunity cost. As you buy more of one thing (candies), you sacrifice more of something else (video game time).
 

Let's say our economy wants to produce 100 more units of unicorn horns (now 500 instead of 400). It now can only make 100 units of potions, not 160. So, it sacrificed 60 units of potions to make those extra 100 unicorn horns. The more horns it makes, the more potions it has to sacrifice.
 

This happens because resources are like employees at a magic shop, some are better at making potions, and some are better at finding unicorn horns. As the economy focuses more on one good, it starts using resources less suitable for making that good. Hence, the PPC is not a straight line, it's a concave curve, which means opportunity cost increases as we produce more of one good.

Imagine if Harry Potter found a spell to reduce unemployment in the magical world, and resources were used more efficiently. They could produce more potions and unicorn horns, right? That's what we call actual growth. When the economy moves from a less efficient point (point A) to a more efficient one (point B), we experience an increase in the actual output or actual economic growth.

Now, let's say Hermione Granger came up with a brilliant spell that increased the number of resources or improved technology. This would mean the magical world could produce combinations of goods they previously couldn't. This is illustrated by an outward shift in the PPC and represents potential growth in the economy.