Production Possibility Frontier

The Production Possibility Frontier (PPF) is a graphical representation of the choices an economy has to make in terms of how much of two different goods or services it can produce, given the available resources. The PPF is a curve that shows the maximum attainable combinations of two goods or services that an economy can produce with its resources. This curve illustrates how an economy must choose between producing more of one item or producing less of another item in order to increase efficiency. For example, an economy may choose to produce more cars and less food in order to gain a greater return on its resources. Similarly, an increase in the production of technology goods may come at the cost of producing fewer food items. The PPF thus indicates the trade-offs that an economy has to make in order to maximize production within the confines of its resources.