Production Possibilities Frontiers

The Production Possibilities Frontiers (PPF) is a model that shows the various

combinations of two goods the economy is capable of producing. As a result of my graph,

it shows the amount of gold produced by scarifying the amount of diamond will be

produced, or the other way around.


On the graph, points A, B, C, D are called technologically efficient. These are the

amount of gold and diamond producer is attainable to produce of. Those are the choices.

People have unlimited wants, but the resources are limited, so we have to make choice in

a margin, which is more of this good and less the other good. We call it opportunity cost.

For example, now we want to produce more diamonds, so we put more time on

producing diamond i...