The production possibility frontier (PPF) or curve shows the maximum combinations of two goods an economy can produce while making full use of limited resources. It demonstrates the key economic problem of scarcity, showing that increasing output of one good requires reducing the output of the other as they compete for the same finite resources. The PPF assumes fixed resources and technology, and depicts the tradeoffs between alternative levels of two goods or services an economy can choose from but cannot have both at the same time.

1. PRODUCTION POSSIBILITY CURVE
or
PRODUCTION POSSIBILITY BOUNDARY
or
PRODUCTION POSSIBILITY FRONYIERS

2. A production–possibility
frontier (PPF)
A production–possibility frontier (PPF), production possibility
curve (PPC), or production possibility boundary (PPB), or
Transformation curve/boundary/frontier is a curve which shows
various combinations of the amounts of two goods which can be
produced within the given resources and technology/a graphical
representation showing all the possible options of output for two
products that can be produced using all factors of production, where
the given resources are fully and efficiently utilized per unit time.

3. PRODUCTION POSSIBILITY CURVE
In macroeconomics, the PPF is the point at which a country’s economy is most
efficiently producing its various goods and services and, therefore, allocating its
resources in the best way possible.
KEY TAKEAWAYS
•In business analysis, the production possibility frontier (PPF) is a curve illustrating
the varying amounts of two products that can be produced when both depend on the
same finite resources.
•The PPF demonstrates that the production of one commodity may increase only if
the production of the other commodity decreases

4. ASSUMPTIONS
• Fixed quantity of factors of
production
• Fuller utilization of the available
factors
• Constant technology
• Two sets of goods

5. PRODUCTION POSSIBILITY schedule
Alternatively, if all the resources
are used for the production of
wheat, we can produce 15 million
tonnes of food grains. In between
these two extreme possibilities,
there are many other alternatives.
Thus we shall have to scarcities
one for the other. This fact is clear
from this Table.

6. PRODUCTION POSSIBILITY CURVE
The concave curve AF shows the join of various
possible combinations which gives a curve known
as transformation curve or production possibility
frontier. Each production possibility curve is the
locus of output combination which is obtained from
given factors or inputs. Similarly B, C, D and E
show the different combinations for two different
goods i.e. cloth and wheat. The economy has to
choose out of these various combinations, which
can be produced by existing resources and
technology. They are also known as ‘Technologically
Efficient’ or ‘Optimum Product Mix’. Here we
should remember that any combination beyond AF
curve does not possess sufficient resources.

7. Application of PPC

8. Properties of PPC
 PPC slopes downwards
(it is because under full employment situation- production of both the
goods can not be increased)
 PPC is concave to the point of origin
(addition unit of goods X --- more and more units of goods Y will have to
be sacrificed)

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