A production possibilities curve shows the combinations of two goods an economy is capable of producing.
The downward slope of the production possibilities curve is an implication of scarcity.
The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. Such an allocation implies that the law of increasing opportunity cost will hold.
An economy that fails to make full and efficient use of its factors of production will operate inside its production possibilities curve.
Specialization means that an economy is producing the goods and services in which it has a comparative advantage.