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Explain what is shown by a production possibility curve (frontier).

      

Explain what is shown by a production possibility curve (frontier).

  

Answers


marlyne
The production possibility frontier (PPF) shows the alternative maximum combinations of two items which can be produced from a fixed quantity of resources.
It reflects scarcity in that it is only possible to obtain more consumer goods by having fewer capital goods. However, the nature of this trade off is not fixed. If it were then the production possibility curve (PPF) would be a straight line.
Any point on the PPF represents an efficient allocation of resources whereas points inside the PPF represent an inefficient allocation of resources since it would be possible to produce more of one good without sacrificing any of the other.
marlinbito answered the question on July 5, 2018 at 09:59


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