Does production take place only on PPC?

Explanation

Both Yes and No.

Yes, production will take place on PPC, if the given resources are fully and efficiently utilised. In such case, production will take place at any point on the curve AB, like point F.
No, Production will take place on PPC, if the resources are either underutilised or inefficiently utilised or both. In such case, production will take place on any point below the curve AB, like point H. Any point below the PP curve, thus highlights the problem of unemployment and inefficiency in the economy.