What is a Production Possibility Frontier?

A PPF is a graph that can be used to explain opportunity cost, and trade off. It is made up of a concave line with, for example, apples on the vertical axis and bananas on the horizontal axis. Since resources are scarce, we cannot produce an infinite amount of apples and bananas. So, if the opportunity cost of producing one apple is giving up the production of one banana, each apple produced will cause a movement along the PPF. This represents trade-off decisions. For production decisions to be efficient, the point must lie on the PPF, and not above or below it. As the aim of an economy is economic growth, the goal is to increase the amount that can be produced. When this is achieved the PPF will shift outwards. This happens by increasing or improving the economy's factors of production: labour, land, capital and investment. For example, if the size of the labour force increases, the amount that an economy can produce will increase, and the PPF will shift outwards with the growth of the economy.