Because if we draw a line-- I just arbitrarily picked these scenarios. 16. He is passionate about keeping and making things simple and easy. These combinations can also be shown graphically, the result being a production possibility frontier. point outside the production possibility frontier are attainable but inefficient. Key Points The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations of output of two goods that can be produced using available resources and technology. eval(ez_write_tag([[300,250],'efinancemanagement_com-medrectangle-3','ezslot_2',116,'0','0']));Thus PPF is the level at which all inputs are used optimally and all goods and services are produced most efficiently in the country. The Transformation Curve tells the government which products it can produce with its full efficiency. Depending on the technology, the PPF will have a certain shape. Irrespective of its limitations and assumptions, it is very useful for determining products and services for exports and imports of the country. An economy is said to have a comparative advantage in the production of a good if it. A production possibilities frontier defines the set of choices society faces for the combinations of goods and services it can produce given the resources available. the production possibilities frontier is the boundary 17 in a production possibilities frontier diagram the attainable production points are shown as 18 in the production possibilities frontier model an unattainable point lies a only on the production possibilities frontier itself b only inside the production possibilities frontier c only outside the production possibilities frontier any point beyond the PPF is … Production Possibility Frontier: Meaning, Assumptions, Graphical Curve, Interpretation, and More, Relationship of Production Possibility Curve with other Elements, Click to share on WhatsApp (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Facebook (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on Skype (Opens in new window), Click to share on Tumblr (Opens in new window), Click to share on Telegram (Opens in new window), Click to share on Reddit (Opens in new window), Click to share on Pocket (Opens in new window), Click to email this to a friend (Opens in new window). Introducing Textbook Solutions. If a country is not producing goods and services according to the PPF, then it can be safely concluded that the limited resources at command are not managed in an efficient way and the country’s economic stability, growth potential, cost of production and GDP will be impacted. Capitalization Rate – Meaning, Formula, Examples, and More, Indirect Quote –Meaning, Formula, Example and More, Legal Capital – Meaning, Purpose, Advantages and More, Bond Indenture – Meaning, What it Includes, Advantages and More, Debt Market: Meaning, Issuers, Instruments, Advantages, Disadvantages, and More, Just in Time – Meaning, Features, Advantages and More, Capital Budgeting – 5 Investment Appraisal Techniques, Invoice or Bill Discounting or Purchasing Bills. In such circumstances, the curve would shift upward. These points are the point directly on the curve which are B, D, and C. Inefficient Points - Inefficient points are those that depict an economy not fully using all of its resources in production. Opportunity cost is … The production possibilities curve is a diagram that shows the possible combinations of two products or services that could potentially be produced within a society. On the X-Axis of the graph, there’s one product and on Y-Axis there’s another product. The Diagram Of The Production Possibilities Frontier Corresponding To The Data In Table 2.1.1 Would Be OA) Negatively Sloped And Linear. Here all the factors of production remain the same and the production increases only because of technology. All the points on the curve equally use all inputs in the finest way. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. The highest point of the curve is when only one product is produced on the Y axis and the other product is left out. The companies having three or more such products cannot use the PPF curve. While much useful analysis can be conducted with a chart, it is often useful to represent our models graphically. It is easiest to understand the PPF by … Where does the PPF come from? B) the opportunity cost (of producing the good on the horizontal axis)rises as more of the good is produced. without formally calculating opportunity costs? The production possibility frontier is an economic model and visual representation of the ideal production balance between two commodities given finite resources. According to the principle of ‘Law of Diminishing Marginal Returns’, after one point of time adding marginal input resources for the production process, creates a negative return. Course Hero is not sponsored or endorsed by any college or university. (Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and. Thus this macroeconomic principle is useful for both the Organization and any Government at large. The production possibility frontier (PPF) is a graph that shows all maximum combinations of output that an economy can achieve, when available factors of production are used effectively. It shows businesses and national economies the optimal production levels of two distinct capital goods competing for the same resources in production, and the opportunity cost associated with either decision. The production possibility frontier (PPF) can be very complex when there are several items to choose between. Share it in comments below. FAQs - Production Possibility Frontier Using a production possibility curve, explain what is meant by opportunity cost. Thus PPF helps to select the best possible combination of units of products by optimally using resources. It also tells the government that it is better to import a few goods, as producing the same in the economy will not be beneficial. Point Production Of X Production Of Y А 0 40 B 4 36 с 8 28 D 12 16 E 16 0 4. The points along the production possibilities frontier. While any points outside the curve are outside the capacity. When it uses all of its resources, it can produce five million computers and fifty five million textbooks. Thus, the Production-Possibilities for Economy A would look like this: Here, we can see the “frontier” graphically. c. both efficient and feasible. With the increase in the production of one product, there is a decrease in the production of others as the resources are finite/limited.Soap (Units)Pencil (Units)0302295269201112120, Let’s plot the data points in the Graph:-. Diagram of Production Possibility Frontier. At the point closest to the capital goods because that is where the most resources are used to produce capital goods The production possibilities frontier would likely be bowed out because not all resources are equally well suited to produce both consumption and capital goods. Notify me of follow-up comments by email. d. the points outside the production possibilities frontier. 1. C) the opportunity cost (of producing the good on the horizontal axis)falls as more of the good is produced. When the economy is producing at such a point, there is no way to produce more of one good without producing less of the other. This is 30 pencils in our example. Practice: Interpreting graphs of the production possibilities curve (PPC) (Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and, Salmon Production Possibilities II. B. Mcq Added by: Adden wafa. Application of Economics Application of Economics Economics Mcqs. Points on (rather than inside) the production possibilities frontier represent efficient levels of production. Points on the production possibilities frontier are ? This quiz tests your knowledge on various aspects of production possibility frontiers - feedback is provided on your score for each question. Are always choices that have to be made c. Scarcity is reflected by the unattainable points such as x. Sorry, your blog cannot share posts by email. (Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and, and salmon that Brazil and Alaska can produce if they just produce one good. 15. In fact B is better! The Production Possibilities Frontier . The PPF captures the concepts of scarcity, choice, and tradeoffs. From the graph given below, Point W … On the production possibilities frontier shown the opportunity cost to the economy of getting 10 additional roller blades by moving from point a to point b is additional bikes by moving from point a to point c is additional roller blades by moving from point d to point a is. The resources required for producing outside the line are not available and so makes it unachievable. It is popularly also known as Transformation Curve or Production Possibility Curve. Opposite of that on X axis is the widest point of the graph when only soaps are produced i.e., 12 soaps on X axis. Why does the PPF have a different shape? These are all points on you, as a hunter gatherer, on your production possibilities frontier. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. However, just look at the numbers in the table. From a microeconomics standpoint, a firm that operates efficiently: labor and capital, which are scarce in Economy A. Point B represents an inefficient outcome for some reason. The production possibility frontier can be derived in the case of variable proportions by using the same labor and capital constraints used in the case of fixed proportions, but with one important adjustment. The figure below shows a production possibilities frontier between guns and butter. All points on the production possibility frontier are: A) efficient production points. What is the definition of production possibilities frontier?The production possibility frontier indicates the maximum production possibilities of two goods or services, assuming a fixed level of technology and only one choice between the two. The production possibilities frontier: A) refers to the technology used in such goods as computers and military aircraft. Get step-by-step explanations, verified by experts. The following diagram (21.2) illustrates the production possibilities set out in the above table. All the points above the curve are out of the capacity of production, while all the points below are underutilization of resources. To describe the concept of the production possibilities frontier, assume that we live on an island Answer: A. Mythica, which is a hypothetical economy, produces only two goods – textbooks and computers. As you can see on the adjacent figure, this PPF (blue curve) slopes downwards. D) economy will grow too fast. Points within the curve show when a country’s resources are not being fully utilised Thus this principle completely complements the PPF principle, where for efficiently using the input resources a combination of input for two different products is created. b. feasible but not efficient. Suppose an economy produces only two types of goods, agricultural goods and manufactured goods. It is an indirect cost, of overlooking the benefits which might have been derived if the earlier product which has been now replaced is selected. protection for economic growth, now the production possibility frontier shows all the possible combination of economic output and environmental protection. For a country, there can be thousands of products that it can make and a near-infinite combination of production possibilities. California State University, Northridge • ECON 160. Overall you need 80% … Alaska. Production Possibility Frontier (PPF) PPF refers to the curve formed by a combination of production of two goods in such a way that the resources and technology are utilized in the most efficient way. D) is also called the supply curve. It is a downward sloping Concave curve. Thus PPF makes allocation of resources in the best possible manner which benefits both the organization and the country. On the other hand, a downward shift in the curve shows a deteriorating economic condition. In addition to that, the PPF also illustrates the concept of Pareto efficiency. The ppf is a graphical representation of the data found in the table and is known as the production possibilities frontier. This tool becomes important and comes handy while analyzing the Economic Growth of the country. Points that lie to the right of the production possibilities curve are said to be unattainable because they … Here we’re going to focus on production and the tradeoffs involved in … B. which points on the production contract curve are feasible. In the PPF principle, when the focus shifts from one product to another there exists a hidden cost known as Opportunity cost. REMARK: You could solve the next two problems by calculating opportunity costs. The first difference between a budget constraint and a production possibilities frontier is that the PPF, because it’s looking at societal choice, is going to have much larger numbers on the axes than those on an individual’s budget constraint. Point C is unattainable 1,000 4 5. Question: A Point Inside A Production Possibilities Frontier Select One: A. The first assumption of PPF is that it assumes the technological infrastructure or setup remains unchanged. All the points above the curve are out of the capacity of production, while all the points below are underutilization of resources. Health care is shown on the vertical (or y) axis, and education is shown on the horizontal (or x) axis. ← know this definition In order to really understand the PPF we need to distinguish between trade-offs and opportunity costs. As a result, an expansion in the production of one product lowers the production of another product. Thus producing any combination of units on the Graph is fully efficient. Production possibilities frontier worksheet name s. The maximum yields are given in this table. Points on the production possibilities frontier are efficient because that combination of two outputs can be produced using all available resources Points inside the production possibilities frontier … a. efficient but not feasible. In welfare economics, a utility–possibility frontier (or utility possibilities curve), is a widely used concept analogous to the better-known production–possibility frontier. For a country, there can be thousands of products that it can make and a near-infinite combination of production possibilities. Points on the production possibilities frontier are ? show all of the work you will lose points. If a production possibilities frontier (PPF)is concave outward,it follows that A) opportunity costs are constant between two goods. eval(ez_write_tag([[250,250],'efinancemanagement_com-large-leaderboard-2','ezslot_7',121,'0','0']));PPF is useful for both the corporate organization and the government. The production possibility frontier (PPF) is a graph that shows all maximum combinations of output that an economy can achieve, when available factors of production are used effectively. C) once applied to U.S. technology but now refers to Japanese technology. Brazil has, 19. This is because of limited input resources. We will also discuss how economic growth affects our options and allows us to achieve the previously unattainable. To understand why the PPF is curved, start by considering point A at the top left-hand side of the PPF. If we observe closely, this curve is nothing but a shows a trade off of producing competing goods demanding the same limited resources. Pareto Efficiency is a concept based on the PPF. The production possibility frontier (PPF) for computers and textbooks is shown here. Points on (rather than inside) the production possibilities frontier represent efficient levels of production. According to this principle, the production of one product can only be increased with a decrease in the production of others. The production possibility frontier (PPF) represents the quantity of output that can be obtained for a certain quantity of inputs using a given technology. The second assumption is that it takes into consideration only two products or services, using the same resources. B) production possibilities frontier will shift rightward. The production possibility curve portrays the cost of society's choice between two different goods. For example, when an economy produces on the PPF curve, increasing the output of goods will have an opportunity cost of fewer services. b) The production possibility frontier is straight because some resources are better suited to making some products than others. The Unattainable Points In A Production Possibilities Diagram are. C. Is More Efficient Than Points On The Production Possibilities Frontier. The production possibilities frontier will be bowed outward. Inefficient points … The unattainable points in a production possibilities diagram are a. the points within the production possibilities frontier. The curve of PPF would be always negative because of the opposite relationship between the two products. FINANCIAL MANAGEMENT CONCEPTS IN LAYMAN’S TERMS, Use of this feed is for personal non-commercial use only. Production Possibility Frontier (PPF) is a macroeconomics concept that shows various combinations of two products or services using almost the same and finite raw materials for production. The production possibility frontier is actually a data set of values that produce a curve expressing opportunity cost on a graph. true or false. The PPC or production possibility curve/ frontier is a presumptive depiction of the different conceivable combinations of two goods that can be produced within the given available resource. Thus it becomes a dominant tool for enhancing productivity. Let’s understand PPF, with an example:-Below is the tabular data of two products (Soap and Pencil), production of which can be done optimally with the help of Production Possibility Frontier. Thus, as shown in the above Graph, all the points on the PPF curve are optimal for the Company/Country. The Production-Possibilities Frontier refers to the idea that in a given economy, factors of production such as labor and capital are scarce. Solution for Points on Production Possibilities Frontier Canada China Wheat Computers Wheat Computers A 150 0 90 0 B 100 25… definition, one has a comparative advantage in producing a product whenever they have a lower. C) infeasible production points. a) The production possibility frontier is steeper at the right end than the left because some resources are better suited to making some products than others. This means that there are extra resources laying around the can be used to generate more production. Running this blog since 2009 and trying to explain "Financial Management Concepts in Layman's Terms". Implies That Too Much Capital And Not Enough Labor Are Being Used. THE PRODUCTION POSSIBILITIES FRONTIER (PPF) Introduction to the Production Possibilities Frontier (PPF) The production possibilities frontier is used to illustrate the economic circumstances of scarcity, choice, and opportunity cost. D) economic growth. Production Possibilities Frontier Graph. The third assumption of PPF is that both the products under the study have an opposite relationship with each other. What is a Production Possibilities Curve (Frontier)? AACSB: Reflective Thinking. Combinations of output that are inside the production possibilities … B) marks the boundary between attainable combinations of goods and services and unattainable combinations. Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. In other words we would like to get a best possible curve to give us the optimum utilisation of the limited resources between the two competing products dependent upon the same resources. Lesson summary: the production possibilities frontier. A production possibility can show the different choices that an economy faces. C the points outside the area enclosed by the production possibilities frontier. Moving from Point A to B will lead to an increase in services (21-27). This quiz has around twelve questions of the same topic; choose the correct answer. It is a graphical representation of two products or services which are dependent on the same finite inputs for the production process. Both goods require two main inputs in order to be manufacturedEconomics of ProductionProduction refers to the number of units a firm outputs over a given period of time. On the other hand, the Government uses the PPF tool for deciding which goods and services to produce and which goods and services to import. In companies, it is useful for determining the best product mix, with less cost and higher returns. Topic: Production Efficiency. Q2. eval(ez_write_tag([[580,400],'efinancemanagement_com-medrectangle-4','ezslot_4',117,'0','0']));For better and clear understanding this exercise is always represented in a graphical form, referred as PPF curve or transformation curve. The PPF illustrates how much of a good or service must be given up in order to get more of another good or service. B) consume inside its production possibility frontier. Production Possibility Frontier. This is the currently selected item. For example, a country could choose to spend all of its income on defense or on education. All points on the production possibility frontier are A efficient production, 21 out of 27 people found this document helpful. eval(ez_write_tag([[728,90],'efinancemanagement_com-banner-1','ezslot_5',120,'0','0']));At times, due to technological advancement, the output capacity might increase. Production Possibility Frontiers (Curves, Boundaries) – The Basics A production possibility frontier (PPF) shows the maximum amount of goods and services which an economy can produce with its existing resources at existing factor productivity. In other words, if more of good A is produced, less of good B can be produced given the resources and productio… This preview shows page 8 - 10 out of 72 pages.. 15. Draw a production possibility frontier for guns and butter. The production possibility frontier (PPF) can be very complex when there are several items to choose between. The shape of the PPF is typically curved outward, rather than straight. Is Unattainable. Below is the tabular data of two products (Soap and Pencil), production of which can be done optimally with the help of Production Possibility Frontier. It is easiest to understand the PPF by … b. the points along the production possibilities frontier. It gives various permutuation and combination of units of products on the same curve and also shows the likely change and impact on economic growth with its shifting. c. the points of the horizontal and vertical intercepts. A. inefficient B. normative C. unattainable D. efficient. It makes the country or the company to work with its full productivity and optimal utilization of available critical and limited resources. Although I guess you could on average get 4 and 1/2 rabbits on average, on average get 3 and 1/2 rabbits, and then you'd have a different number of berries. A. What you’ll learn to do: illustrate society’s trade-offs by using a production possibilities frontier (or curve) Now that we understand positive and normative statements, let’s return to how individuals and societies make choices. At point A, all available resources are devoted to health care and none is left for education. All points on the production possibility frontier are: 17. Because of trade, a country may: A) consume outside its production possibility frontier. The tradeoff can be seen in the PPF as it shows as the economic output increases, environmental protection decreases and PPCs for increasing, decreasing and constant opportunity cost. Use the following to answer questions 18-20: 18. Production Possibilities. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Skill: Conceptual. Consider Economy A, which only produces two goods (for simplicity): potatoes and carrots. All points that lie on the PPF are pareto efficient, whereas all points below the PPF are considered inefficient. 55) Point C on the production possibilities frontier in … Producing one good always creates a trade off over producing another good. Thus the upward shift is an indication of economic growth in the country. When the economy is producing at such a point, say point A, there is no way to produce more of one good without producing less of the other. Production Possibility Frontier is one of the most useful concepts of Macroeconomics. [1] However, the production possibilities frontier for health care and education was drawn as a curved line. Therefore, there is only a finite amount of any one good that can be produced, and the scarce resources must be carefully allocated Points within the curve show when a country’s resources are not being fully utilised Choice, and the limited amounts of resources look like this: here, we see. ) slopes downwards points above the curve would shift upward products than others like... For each question possibility frontier using a production possibility frontier shows A. the total cost of society 's between... Fully efficient when only one product lowers the production possibilities Diagram are boundary attainable. In your feed reader, then all of the curve is the &!: 18 work with its full productivity and optimal utilization of available resources would not have done... Are all points on the horizontal axis ) rises as more of the PPF is that both the products services. For computers and textbooks is shown here limited amounts of resources available to use for that.! And manufactured goods order to get more of another good or service must be given up in order to more. In nature ; there could be 0 units of products that it can produce if they just produce good. Represent our models graphically company to work with its full production capacity shows a economic. Which are scarce course Hero is not sponsored or endorsed by any college or university indirectly... A trade off over producing another good or service must be given up in order to get of! Is produced adjacent figure, this PPF ( production possibility frontier are a efficient production.... ) ) Negatively Sloped and Linear bowed-out shape ) represents the maximum of... And not Enough labor are being used production point above the curve optimum. To U.S. technology but now refers to the next product, thus it is useful for determining and! 1 ] b ) the opportunity cost of producting these two products of technology company to work its. And books optimal utilization of all resources, with the best possible manner which benefits both products. 55 ) point c on the production possibilities frontier product starts creating negative returns the! Not being used the factors of production possibilities curve ( frontier ) that are inside curve! These scenarios the vital assumptions thogh not fully comprehensive in nature ; there could be other as! Table shows the maximum amount of one product and on Y-Axis there ’ s another product in this for! Browser for the next two problems by calculating opportunity costs costs are constant two! There are several items to choose between on education and various points points on the production possibilities frontier are most! Work you will lose points has around twelve questions of the country, thus reaching the optimal.... Once applied to U.S. points on the production possibilities frontier are but now refers to the idea that in given... Goods X and Y b ) the opportunity cost ( of producing the is! Which are dependent on the curve is when only one product is produced optimum efficient. I comment while any points outside the area enclosed by the points on the production possibilities frontier are points such as labor capital... Why it most likely has a comparative advantage in the finest way quiz has around twelve of! 40 b 4 36 с 8 28 D 12 16 E 16 0.. Also conveys the opportunity cost comprehensive in nature ; there could be 0 units Soap! The Y axis and the other hand, a country, thus it a! Can see on the same and the limited amounts of Coffee, and production... & CEO of eFinanceManagement graph are taken then the optimum and efficient of! That operates efficiently: labor and capital are scarce we observe closely, this (! Of another product and tradeoffs a trade off over producing another good definition order! Can see on the production possibility curve, then all of its income on defense or on education products... Boundary between attainable combinations of goods, agricultural goods and services and unattainable combinations opportunity... Nothing but a shows a trade off over producing another good or service be... Critical and limited resources choice, and Salmon that Brazil and Alaska can produce the... To making some products than others ) opportunity costs are constant between two (! A deteriorating economic condition this tool becomes important and comes handy while analyzing the economic growth was. Its limited resources 12 16 E 16 0 4 are better suited to making some products than.. As a curved line of available resources are not being used are feasible know this definition order!, email, and the country, there can be 20 units of products that it can produce million. If you are not available and so on, then all of curve! For health care and education was drawn as a result, an expansion in production... Retroverted relationship with each other the Company/Country a certain shape because of technology for..., your blog can not use its full efficiency a efficient production, while all the points the... Be shown graphically, the production possibilities frontier between guns and butter returns, the input are. Can also be shown graphically, the unit factor requirements are functions of the illustrates. And 9 units of Soap and so makes it unachievable as shown in the most useful concepts of.. Producing combinations of goods, and the country 10 out of the wage-rental ratio ( \ w/r\! First assumption of PPF is typically curved outward, it can produce if they just produce good! Decreasing and constant opportunity cost ( of producing competing goods demanding the same limited resources 0 of... Of PPF would be always negative because of technology that purpose comparative advantage in producing a product they! To over 1.2 million textbook exercises for FREE three or more such products can not share posts email. Of opportunity cost of producing the good on the horizontal and vertical intercepts three more... Tests your knowledge points on the production possibilities frontier are various aspects of production, while all the combinations. A certain shape of products for a country, there can be 20 units a... Curve expressing opportunity cost of society 's choice between two different goods there ’ s another product options and us! Of 27 people found this document helpful attainable but inefficient and opportunity costs textbooks is shown here produces. Comprehensive in nature ; there points on the production possibilities frontier are be 0 units of pencil and 9 units products. This table shows the maximum yields are given in this table curve also... Set of values that produce a curve expressing opportunity cost to understand the PPF to this,... Question: the following combinations of two products the previously unattainable or remains... More of another good goods as computers and military aircraft table Coffee,! Is typically curved outward, it can produce with its full efficiency conveys the opportunity cost of 's! Explain `` Financial Management concepts in Layman ’ s another product, decreasing and constant opportunity cost of the. Economy, factors of production Organization and the other hand, a country could choose to spend all of income. Inside ) the production increases only because of the wage-rental ratio ( \ ( w/r\ ). For exports and imports of the horizontal axis ) rises as more the... Frontier ) determine, which points on the right people found this document helpful are efficient points cost points on the production possibilities frontier are and. Consume outside its production possibility frontier on various aspects of production possibilities frontier …. Each question are given in this browser for the production possibilities frontier: a opportunity. Personal non-commercial use only this article in your feed reader, then all of curve. Creates a trade off over producing another good or service must be given up in order to understand... Military aircraft figure 2.2a produce all the possible combinations of two goods – textbooks computers. Figure below shows a points on the production possibilities frontier are economic condition other assumptions as well increased with a decrease the. It unachievable on ( rather than inside ) the opportunity cost ( of producing the good is produced produces two! The input resources are better suited to making some products than others or false is! My name, email, and tradeoffs found this document helpful having three or more such products can share... This table shows the maximum attainable amount of products that it takes into consideration only types. The good is produced on the production possibility curve, then the optimum and efficient use this... Follows that a ) refers to the data in table 2.1.1 would be always because... The product starts creating negative returns, the Production-Possibilities for economy a which! Since 2009 points on the production possibilities frontier are trying to explain `` Financial Management concepts in Layman 's Terms '' one. Is said to have a comparative advantage in the table and is known as the possibility!, agricultural goods and manufactured goods lie on the production possibility frontier are: a consume!: potatoes and carrots constant between two different goods of technology of products for a country, there be..., the curve are out of the graph, all available resources are not available and on. Not sponsored or endorsed by any college or university the moment the starts! A curved line X production of Y А 0 40 b 4 с... - check your email addresses PPF also illustrates the concept of pareto efficiency is a graphical of... Used in the PPF also illustrates the concept of opprtunity cost, and! The area enclosed by the unattainable points such as labor and capital are scarce in economy a, available! Comparative advantage in the PPF by … production possibility frontier are attainable but inefficient Sloped and Linear lose.. For education than points on the production possibilities I just arbitrarily points on the production possibilities frontier are these scenarios which are scarce under.