Production Possibility Frontier - PPF

A curve depicting all maximum output possibilities of two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.



As indicated on the chart above, points A, B, and C represent the points at which production of Good A and Good B is most efficient. Point X demonstrates the point at which resources are not being used efficiently in the production of both goods, and point Y demonstrates an output that is not attainable with the given inputs.

Investopedia Says:
Among others, factors such as labor, capital, and technology will effect where the production possibility frontier lies. The PPF is also known as the production possibility or transformation curve.

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