PPF (Production Possibilities Frontier)

The Production Possibilities Frontier (PPF) is a graph that shows the maximum possible combinations of two goods or services that can be produced by a particular economy given a set of resources and given the technologies currently available. It shows the different combinations of the two goods that a particular economy is capable of producing efficiently. The PPF represents the limits to production potential due to the availability of resources and technology. The PPF shows the trade-offs associated with producing more of one good and less of another, as the resources and technology in the economy cannot be used for both goods simultaneously. It also shows the cost of producing more of one good and the benefit from producing more of another. The PPF can be used to demonstrate economic growth in the form of shifts in the PPF outward as the availability of resources and technology increases.