Economics
Explainer
The PPF: Mapping an Economy's Choices
Why does producing more gold get more and more expensive?
Quick check · tap an answer to continue
Lesson notes
Key points
- A production possibilities frontier shows the maximum combinations of two goods an economy can make with given resources and technology.
- Points on the curve are efficient, points inside waste resources, and points outside are unattainable for now.
- The curve bows outward because resources are specialised, so each extra unit of gold sacrifices more cocoa.
- Economic growth, from new technology or more capital, shifts the whole frontier outward.
Definitions
- Economic growth
- An outward shift of the PPF from more resources or better technology.
Takeaway: A bowed PPF reflects increasing opportunity cost.
Quick check: Why is a typical PPF bowed outward?
- Prices always rise
- Demand is unlimited
- Resources are specialised
PPFEfficiencyIncreasing opportunity costOutward shift
Lessons like this, for your syllabus.
Short narrated study videos written for your course, level and exam. Free to start.
Get lessons for your own syllabus