Production Possibility Frontier - PPF

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DEFINITION of 'Production Possibility Frontier - PPF'

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.

Production Possibility Frontier (PPF)



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; point Y demonstrates an output that is not attainable with the given inputs.

INVESTOPEDIA EXPLAINS 'Production Possibility Frontier - PPF'

Among others, factors such as labor, capital and technology will affect where the production possibility frontier lies. The PPF is also known as the production possibility or transformation curve.

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RELATED FAQS
  1. Do production possibility frontiers have multiple possible equilibria?

    Production possibility frontiers involve the trade-off of inputs within an economy and can possess multiple possible equilibria. ... Read Full Answer >>
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    The production possibility frontier (PPF) is used by companies to calculate production goals and can help to determine how ... Read Full Answer >>
  3. Can you calculate the production possibility frontier in n-dimensional space?

    The production possibility frontier can be calculated in n-dimensional space. However, a clear understanding of the levels ... Read Full Answer >>
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