The production possibilities frontier is the boundary represented by the curve. It shows the maximum combinations that can be produced when available resources are used fully and efficiently.
A production point can fall in three locations:
On the frontier: Production is efficient because available resources are being fully used.
Inside the frontier: Production is inefficient because some available resources are underused.
Outside the frontier: Production is unattainable with the resources currently available.
Different points along the frontier can all represent efficient production. However, they represent different allocations of resources. Moving along the frontier toward more of one output requires giving up some of the other, showing the trade-offs created by scarcity.
The PPC therefore helps economists distinguish between two questions: Are available resources being used efficiently? And how are those resources being allocated among different possible uses?
