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.

BREAKING DOWN '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. Can you calculate more than two inputs with the production possibility frontier?

    Production possibility frontier is a concept representing economic production using scarce resources at maximum efficiency ... Read Full Answer >>
  2. How do I calculate the production possibility frontier in Excel?

    The production possibility frontier is actually a data set of values that produce a curve expressing opportunity cost on ... Read Full Answer >>
  3. 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 >>
  4. Is the production possibility frontier used by businesses to calculate their production ...

    The production possibility frontier (PPF) is used by companies to calculate production goals and can help to determine how ... Read Full Answer >>
  5. 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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    Guns and butter refers to a famous model explaining the relationship between two goods that are important for a nation's ... Read Full Answer >>
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