Production Possibility Frontier
- Production Possibility Frontier (PPF) shows the maximum output that can be produced if all factors of production are used to their full potential
- It is curved because some resources are better at producing some things than others
- An increase in factors of production will cause the PPF to come outwards if it helps you produce more of both goods
In the diagram above, point X shows unemployment of factors of production. A movement from point A to B causes more good B to be produced but there is an opportunity cost of some good A. Point Y is impossible to achieve in the short run. An expansion in the PPF will allow point Y to be achievable in the long run.
