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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