Question

Give the meaning and characteristics of production possibility frontier.

Answer 1

Production Possibility Frontier or Production Possibility Curve is the curve which shows the combinations of two goods and services that can be produced with fuller utilisation of a given amount of resources in the most efficient way and with a given production technology.
Characteristics of PPF
(a) Concave to the origin: PPF or PPC is concave to the origin. This is because the opportunity cost of producing a good in terms of the loss of the output of other good, tends to increase.
(b) Downward sloping curve: PPC curve is downward sloping from left to right. This is because for production of every additional unit of one good, more and more units of other good has to be sacrificed.