production possibility frontier

• The PPF shows the maximum potential output of an economy
• • Growth in the economy will shift the PPF outwards whilst a shift inward of the PPF shows that productive potential of an economy has declined
• • Production at a point inside the PPF indicates an underuse or an inefficient use of resources 
• The PPF shows only what could be produced but not what should be produced
• Growth in the economy can happen if: the quantity of resources available for production increases, or, there is an increase in the quality of resources 
• Efficiency on the boundary is of two types: productive efficiency and allocative efficiency
• • Capital goods - goods that are used in the production of other goods
• Consumer goods - goods and services that are used by people to satisfy their needs and wants
• Margin - a point of possible change
• Production possibility frontier - a curve which shows the maximum potential level of output of one good given a level of output for all other goods in the economy