Production-Possibility Frontier(PPF)

A production possibility frontier shows the maximum number of alternative combinations of goods and services that a society can produce at a given time when there is full utilization of economic resources and technology.The production possibility frontier depicts not only limited production capability and therefore the problem of scarcity,but also the concept of opportunity cost arise.Here is a simple PPF graph.

figure 1.1

figure 1.2

However, the production possibility frontier shifts outward over time as more resources become available and/or technology is improved. Growth in an economy productive capability is depicted in figure 1.2 by the outward shift of the PPF from PP1 to PP2. Points on the PPF are considered to be efficient. Points within the frontier are inefficient,and point outside the PPF are unattainable. Positions outside the PPF are unattainable since the frontier defines the maximum amount that can be produced at a given time. Positions within the frontier are inefficient because some resources are either unemployed or underemployed.