Production Possibility Frontier

• Concept: Shows maximum production combinations with given resources.
• Trade-offs: Producing more of one good means less of another.

Example:

• Country can produce either guns (defense) or butter (food).
• More guns = less butter.

Graph:

• PPF curve is bowed outward (due to increasing opportunity cost).
• Inside curve = inefficient.
• On curve = efficient.
• Outside curve = impossible (without trade/tech growth).

Key Insight: PPF shows opportunity cost and efficiency.