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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.
Suppose production occurs initially on the production possibility frontier (PPF) at point A. Suppose there is an increase in the labour endowment. This will cause an outward shift in the labour constraint. The PPF and thus production will shift to point B. Production of clothing, the labour-intensive good, will rise from C 1 to C 2.
Trade equilibrium: both countries consume the same (=), especially beyond their own Production–possibility frontier; production and consumption points are divergent. The Heckscher–Ohlin model ( /hɛkʃr ʊˈliːn/ , H–O model ) is a general equilibrium mathematical model of international trade , developed by Eli Heckscher and Bertil Ohlin ...
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.
Production function. inputs; diminishing returns to inputs; the stages of production; shifts in a production function; Economic rent. classical factor rents; Paretian factor rents; Production possibility frontier. what production levels are possible given a set of resources; the trade-off between various input combinations; the marginal rate of ...