This means that if all resources will be spent on food, the maximum production is 7 thousand tons but there will be no output for clothing. In this figure, it can be seen that the Point A lies along the Y-axis since the production for clothing is 0. If Table 1 is illustrated in a graph, the result will be a curve shown in Figure 1, which is also the production possibility frontier.
The alternative A shows that the production is seven thousand tons of food and 0 million meters of clothing, while alternative B shows that production is 6 thousand tons of food and 33 million meters of clothing, and so on. Order custom essay The Economic Concepts in the Production Possibilities Frontier In Table 1, the production possibilities for these goods are shown. In the illustrated example of Dwivedi (2002), the two goods are food and clothing. This definition can be explained best by using concrete samples and illustrations.īut before discussing the details of the first example, if an economy produces two goods, four assumptions must be drawn using a static model: (1) the resources of this economy consist only of labor and capital, (2) the labor and capital is available and given, (3) this economy produces two goods, (4) the technology for production is given (Dwivedi, 2002). In economics, the production possibilities frontier (PPF) is a graph that illustrates the possible alternative combinations of two goods that can be produced in a certain period of time under the conditions of a given state of technology and fully employed resources (Arnold, 2008). And in a given example of two kinds of products, there is a corresponding trade-off in order to attain a desired production performance in a given economy. In a given economy of two goods, there is an established model that explains the relationships of production efficiency and inefficiency.
It is true that scarcity of resources prompts man to study and explore all kinds of possibilities to maximize production in a certain given period of time.
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