Skip to main content
Back

Production Possibilities Frontier (PPF) - Introduction and Productive Efficiency definitions

Control buttons has been changed to "navigation" mode.
1/13
  • Production Possibilities Frontier
    A curve depicting all possible combinations of two goods an economy can produce with fixed resources and technology.
  • Scarcity
    A condition where resources are limited, restricting the amount of goods and services that can be produced.
  • Attainability
    A status indicating whether a certain mix of goods can be produced given current resources and technology.
  • Unattainability
    A situation where a production level cannot be reached with the available resources and technology.
  • Productive Efficiency
    A state where production occurs on the curve, maximizing output from available resources.
  • Allocative Efficiency
    A condition where the mix of goods produced matches consumer preferences in the economy.
  • Fixed Resources
    Inputs such as labor, land, and human capital that remain constant during analysis.
  • Fixed Technology
    A scenario where production methods and tools do not change during the period considered.
  • Thin Crust Pizza
    One of the two goods produced in the example economy, representing a specific output choice.
  • Robots
    The second good produced in the example economy, illustrating alternative production possibilities.
  • Human Capital
    The skills and knowledge embodied in the workforce, considered a resource in production.
  • Inefficiency
    A situation where production occurs inside the curve, indicating underutilization of resources.
  • Maximum Output
    The highest quantity of a good that can be produced when all resources are devoted to its production.