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In microeconomics, a production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB) is a graphical representation showing all the possible options of output for two that can be produced using all factors of production, where the given resources are fully and efficiently utilized per unit time.
Figure 6: Production possibilities set in the Robinson Crusoe economy with two commodities. The boundary of the production possibilities set is known as the production-possibility frontier (PPF). [9] This curve measures the feasible outputs that Crusoe can produce, with a fixed technological constraint and given amount of resources.
The production possibilities frontier (PPF) for guns versus butter. Points like X that are outside the PPF are impossible to achieve. Points such as B, C, and D illustrate the trade-off between guns and butter: at these levels of production, producing more of one requires producing less of the other. Points located along the PPF curve represent ...
A diagram showing the production possibilities frontier (PPF) curve for "manufacturing" and "agriculture". Point "A" lies below the curve, denoting underutilized production capacity. Points "B", "C", and "D" lie on the curve, denoting efficient utilization of production.
Productive capacity has a lot in common with a production possibility frontier (PPF) that is an answer to the question what the maximum production capacity of a certain economy is which means using as many economy’s resources to make the output as possible. In a standard PPF graph, two types of goods’ quantities are set.
He stated a similar condition for production, namely that the production–possibility frontier (PPF, to which he gave the alternative name of 'productive indifference curve') should be tangential with an indifference curve for the community. He was one of the originators of the PPF, having used it in a paper on international trade in 1932. [24]
On a frontier of production possibilities, Pareto efficiency will happen. It is impossible to raise the output of products without decreasing the output of services when an economy is functioning on a basic production potential frontier, such as at point A, B, or C.
Productive inefficiency, with the economy operating below its production possibilities frontier, can occur because the productive inputs physical capital and labor are underutilized—that is, some capital or labor is left sitting idle—or because these inputs are allocated in inappropriate combinations to the different industries that use them.