The Production Possibility Frontier/Production Possibility Curve, however, is often criticized for being oversimplified and unrealistic. Even factors of a larger scope in the economy such as economic growth or stagnation, the effects of supply and demand, dwindling labor force, and so on can be represented with a PPF/PPC if provided with all the necessary data. Many economic concepts and problems can be represented using a PPF/PPC, such as productive efficiency, allocation, opportunity cost, limited or scarce resources, and the like. A PPF/PPC representation can take the shape of a concave or a straight line, (aka “linear”), depending on the elements and factors being taken into the equation.
The desired result is to maximize the potential output level of one of the commodities in relation to that of the other. Note that this is not limited to a physical commodity or goods as the PPF/PPC can also be used to represent the productive efficiency of services. Other terms used in the same way are Production Possibility Boundary and transformation curve.Ī PPF/PPC model would theoretically show the comparison of one commodity’s production in comparison to the level of another and what effect the decrease or increase of one commodity’s production will have on the other. Production Possibility Curve (PPC) is simply another term used to refer to this. The Production Possibility Frontier (PPF) is an economics term referring to a graphical representation of the possible combinations or rates that two different commodities will be produced at given the same amount of resources, manpower, and other factors of production available within a certain period of time. One of the most common used is the Production Possibility Frontier (PPF) or the Production Possibility Curve (PPC) which are used when comparing two commodities and their effects on each other. It is quite common to encounter graphical representations of these calculations. It is no surprise that different calculations and mathematical equations are involved in each and every major concept. Laws of supply and demand, factors of production, allocable resources, opportunity costs, scarcity these are all terms and concepts that affect the economy on the macro- and the microeconomic levels. The world of economics is one that can be very complicated.
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