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Production Possibilities Frontier (PPF)

Production Possibilities Frontier (PPF). The production possibilities frontier illustrates concepts of : Scarcity - resources are limited. Choice - choices in the production of different goods need to be made. Opportunity cost - to gain more of a good, something else must be given up. .

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Production Possibilities Frontier (PPF)

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  1. Production Possibilities Frontier(PPF)

  2. The production possibilities frontier illustrates concepts of : • Scarcity - resources are limited. • Choice - choices in the production of different goods need to be made. • Opportunity cost - to gain more of a good, something else must be given up.

  3. THE PRODUCTİON POSSİBİLİTİES FRONTİER shows the maximum amount of any two products that can be produced at a given time from a fixed quantity of resources.

  4. Slope of the curve = opportunity cost The takeaway from this table is that specialization is bad, because the opportunity costs are rising as we specialize. 

  5. Characteristics of the Production Possibilities Frontier (Summary) 1. Points along the frontier show the trade off between two differentgoods for society; to get more of one, we must give up some of the other (A, B and C ). 2. Points outside the curve are unobtainable with given resources and technology (Point Y ). 3. Points inside the frontier are attainable, but do not utilize society's resources efficiently (Point X).

  6. Ideas Illustrated by the Production Possibilities Frontier: • Efficiency- inside vs. on the frontier • Tradeoffs - movement along the frontier • Opportunity Cost - slope of the frontier • Economic Growth - changing position of the frontier

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