1.1.4: Production Possibility Frontiers (PPF)

• A production possibility frontier shows the maximum possible combinations of capital and consumer goods that the economy can produce with its current resources and technology
• Production possibility frontier (PPF) is drawn as a curve, as the first resources switched from capital to consumer good production are not adding much to capital goods but will be much more productive in production of consumer goods, and vice versa
• Growth in the economy can be represented by the PPF shifting outwards. This is an increase in total productive capacity

  
• Points inside a PPF curve signify the economy not working to its full capacity, and those outside it are unobtainable
• The curve may shift left or up if capacity for consumer or capital goods respectively increases. This may happen due to technology