1.7 : Production Possibility Frontier (PPF)

The production possibilities frontier is a graphical representation of all the possible output combinations of two goods an economy can produce. This representation assumes that the resources and technology available at any given time are fixed. 

Additionally, for simplicity, it assumes that there are only two goods.

The production possibilities frontier helps visualize the trade-offs between the goods as the economy can increase the production of one good only by reducing the output of the other.

Points along the production possibilities frontier are attainable. They represent an efficient use of resources, meaning that the economy is operating at its maximum capacity.

A point inside the production possibilities frontier is attainable but could be more efficient. It represents the underutilization of resources.

A point outside the production possibilities frontier is unattainable with the current resources and technology.

In essence, the production possibilities frontier serves as a visual tool for understanding the concepts of trade-offs, efficiency, and opportunity costs.