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PPF to Improve Productivity
3 min readApr 28, 2021
- Production Possibility Frontiers are an economic idea used for the allocation of resources are important because it showed the optimal allocation of resources for the best return.
- This makes them useful because you could create a PPF for your own timetable to decide on how you should allocate time towards leisure compared to for example your time studying
Characteristics of a PPF:
- Axes: The axes are going to be the 2 options you get and in the case of the example above, its the economies choice between producing 2 different final goods
- All points on the line(called the frontier) are positions of maximum production due to the capabilities of the economy and the limitations of its capital.
- Opportunity Cost is represented by the slope of the curve which means that as we approach the centre of the frontier, the Opportunity Cost increases
- Production is possible in any position inside the PPF although this will lead to inefficient allocation of resources
- Trade Offs occur because at any point of the PPF you are trading off the potential production of a different quantity of products
- The reason the trade offs are curved is because of the law of diminishing returns which suggests the marginal utility of a…
