Reading a production possibility frontier
| English | 中文 | Pinyin |
|---|---|---|
| production possibility frontier/prəˈdʌkʃn ˌpɒsəˈbɪlɪti ˈfrʌntɪə/ | 生产可能性边界 | shēng chǎn kě néng xìng biān jiè |
| productive capacity/prəˈdʌktɪv kəˈpæsɪti/ | 生产能力 | shēng chǎn néng lì |
A decision you can investigate
- A print room can use its workers and machines to make books or posters.
- A choice of output changes what the same resources can produce.
Build the explanation
- A production possibility frontier 生产可能性边界 shows maximum combinations with current resources and technology. Points on it use resources efficiently; points inside leave productive capacity 生产能力 unused.
- A move along the frontier reallocates resources. An outward shift means more productive capacity, perhaps from skills or machinery; damage or lost resources can shift it inward.
Work through the evidence
- The frontier points are (books, posters): (0,30), (10,26), (20,18), (30,0). Moving from 10 to 20 books gains 10 books and gives up 8 posters.
- Opportunity cost per extra book = posters forgone
- books gained = 8/10 = 0.8 poster. Moving from 20 to 30 books gives up 18 posters: 1.8 posters per book.
From (20,18) to (30,0), what is the opportunity cost per additional book?
Give up 18 posters to gain 10 books: 18/10 = 1.8.
Which change can shift the frontier outward?
New productive machinery can expand capacity; reallocation changes a point.
Moving between points on the same frontier demonstrates economic growth.
It reallocates existing resources. Growth in productive potential shifts the frontier outward.
Test the limits
- The opportunity cost rises in this example because resources are not equally suitable for both products. A straight frontier would model constant opportunity cost.
- More actual production from an inside point need not mean the frontier shifted. A point outside is currently unobtainable, not permanently impossible. The same opportunity-cost rule applies to a consumer’s next-best purchase and a government’s next-best use of a public budget.
Which point is inside the stated frontier?
At 20 books, capacity permits 18 posters. Ten posters is feasible but below the frontier.
Apply and explain your answer
- What does a move from an inside point to the existing frontier represent?
- Better use of existing resources rather than an increase in productive capacity.
Match the terms to their meanings.
Each term describes a specific mechanism in this lesson.
Use the terms precisely
- productive capacity: The maximum output possible with current resources and technology.
- production possibility frontier: Maximum feasible combinations of two outputs with available resources.
The frontier points are (books, posters): (0,30), (10,26), (20,18), (30,0). Moving from 10 to 20 books gains 10 books and gives up 8 posters. Opportunity cost per extra book = posters forgone books gained = 8/10 = 0.8 poster. Moving from 20 to 30 books gives up 18 posters: 1.8 posters per book.
The opportunity cost rises in this example because resources are not equally suitable for both products. A straight frontier would model constant opportunity cost. More actual production from an inside point need not mean the frontier shifted. A point outside is currently unobtainable, not permanently impossible. The same opportunity-cost rule applies to a consumer’s next-best purchase and a government’s next-best use of a public budget.
A production possibility frontier shows maximum combinations with current resources and technology. Points on it use resources efficiently; points inside leave productive capacity unused.