The production possibilities frontier illustrates concepts of :
 Scarcity - resources are limited.
 Choice - choices in the production of different goods need
to be made.
 Opportunity cost - to gain more of a good, something else
must be given up.
THE PRODUCTİON POSSİBİLİTİES FRONTİER
shows the maximum amount of any two products that can be
produced at a given time from a fixed quantity of resources.
Different
Combina
tions
Broccoli
Pizza
6
0
100
5
5
80
4
10
60
3
15
40
2
20
20
1
25
0
Different
Broccoli Diff Pizza Diff
Combinations
a
b
c
d
6
0
100
5
10
95
4
16
85
3
20
70
2
23
40
1
25
0
e
Opp cost
Pizza
Opp cost
Broccoli
f
g
Different
Broccoli Diff Pizza Diff
Combinations
Opp cost
Pizza
Opp cost
Broccoli
a
b
c
d
e
f = c/e
g = e/c
6
0
-
100
-
-
-
5
10
10
95
5
2
0.5
4
16
6
85
10
0.6
1.667
3
20
4
70
15
0.2667
3.75
2
23
3
40
30
0.1
10
1
25
2
0
40
0.05
20
Slope of the curve = opportunity cost
The takeaway from this table is that
specialization is bad, because the
opportunity costs are rising as we
specialize.
Characteristics of the Production
Possibilities Frontier
(Summary)
1. Points along the frontier show the
trade off between two different goods
for society; to get more of one, we
must give up some of the other (A, B
and C ).
2. Points outside the curve are
unobtainable with given resources
and technology (Point Y ).
3. Points inside the frontier are
attainable, but do not utilize society's
resources efficiently (Point X).
Ideas Illustrated by the Production Possibilities Frontier:
 Efficiency - inside vs. on the frontier
 Tradeoffs - movement along the frontier
 Opportunity Cost - slope of the frontier
 Economic Growth - changing position of the frontier