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Production Possibility Frontier - PPF
What does it mean?
A curve depicting all maximum output possibilities of two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.
As indicated on the chart above, points A, B, and C represent the points at which production of Good A and Good B is most efficient. Point X demonstrates the point at which resources are not being used efficiently in the production of both goods, and point Y demonstrates an output that is not attainable with the given inputs.
In Other Words...
Among others, factors such as labor, capital, and technology will effect where the production possibility frontier lies. The PPF is also known as the production possibility or transformation curve.
Related Links
Economics Basics Tutorial - Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
Related Terms
Absolute Advantage | Comparative Advantage | Macroeconomics | Opportunity Cost | Trade
1 |
A | B |
C | D |
E | F |
G | H |
I | J |
K | L |
M | N |
O | P |
Q | R |
S | T |
U | V |
W | X |
Y | Z
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