What is the Production Possibilities Frontier?

Productive capacities and resource limitations mean that an economy has certain possibilities that allow or restrict its capacities to produce certain goods and services. Therefore, the set of resources and productive factors Of those available to a country, it may engage in different activities, its main ones being the production of capital or consumer goods.

The productive capacity will limit the companies of a certain country the production of any type of good, especially capital goods, which will be limited in their ability to produce the quantity of consumer goods.

The concept of Production Possibilities Frontier (PPF) is a graphic representation of this event. It is a concave curve with respect to the origin (where the country's resources are located). The point is to know which resources are dedicated to which production and which to another: some will be more efficient for consumer goods and others for capital goods. In itself, the concept of PPF encompasses the set of possible combinations that can occur in a country when it comes to disposing of resources and knowing where they are going to be directed.

Normally, resources are allocated to different types of production, thus promoting the production more effective due to the diversification. The diversity of production can be shown in the PPF through its curvature, which indicates the use of resources to be able to manufacture both types of goods.

Production possibilities frontier

Source: economiamateria1.blogspot.com

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