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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.
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.
The theory states that when a country produces more than it can consume, it produces a surplus. This underutilization causes an inward movement on the production possibilities frontier. Trade with another country is then used to vent off this surplus and to bring the production possibilities in the frontier back to full capacity.
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 ...
12:19, 6 January 2010: 470 × 475 (13 KB) Jarry1250: Crop title off so can be used in more places: 12:01, 18 December 2006: 470 × 500 (13 KB) Everlong {{Information |Description=A diagram showing the production possibilities frontier (PPF) curve for producing "guns" and "butter". Point "A" lies below the curve, denoting underutilized ...
Point X is unobtainable given the current "budget" constraints on production. A production-possibility frontier is a constraint in some ways analogous to a budget constraint, showing limitations on a country's production of multiple goods based on the limitation of available factors of production.
The locus of the various combinations of fish and coconuts that he can produce from devoting different amounts of time to each activity is known as the production possibilities set. [9] This is depicted in the figure 6: Figure 6: Production possibilities set in the Robinson Crusoe economy with two commodities.
Pareto was hampered by not having a concept of the production–possibility frontier, whose development was due partly to his collaborator Enrico Barone. [19] His own 'indifference curves for obstacles' seem to have been a false path. Shortly after stating the first fundamental theorem, Pareto asks a question about distribution: