Production Possibility Frontier

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Production Possibility Frontier

A graphical representation of the possible outputs using two or more inputs assuming that all inputs are used efficiently. For example, if one wishes to determine the most efficient use of raw material and labor to make as much of a product as it efficient, one may design a PPF that would show all possible production outputs, which is shown as a curve. One would then find the most efficient point on a curve and use resources accordingly.
References in periodicals archive ?
Speech, more than any policy narrative, causes nonlinearities of growth -- the leap outwards from the production possibility frontiers.
Chapter 4 by Eirik Romstad brings in a theoretical discussion about the nature of public and private goods, production possibility frontiers of public goods in terms of their relative prices.
The table shows that revealing the relative sizes of the PPFs (production possibility frontiers) before the start of the experiment enabled improvement over autarky for most teams.
Teams Japan Teams Improving Improving on Autarky on Autarky Linear PPFs (production possibility frontiers) Two-minute rounds Eight teams per experiment First matches 47% 66% Repeat matches 18% 95% Linear PPFs PPFs presented on a chart One-minute rounds Ten teams per experiment 75% 88% Concave PPF PPFs presented on a chart Two-minute rounds Eight teams per experiment 16% 20%
Key words: benchmarking, production possibility frontiers, efficiency/inefficiency measurement, J-Curve of adoption of innovations, convergence.
In the early literature on production possibility frontiers (see, for example, AIGNER & CHU, 1968; AFRIAT, 1972), it was assumed that the leader of a sample was always reaching the boundary of the frontier.
Moreover, since some production factors are, at least, partly commodity-specific, the reorientation of output pattern can follow only along the new production possibility frontier which in the short-run should lie inside the previous one.
In Figure 4, [PPF.sub.p] represents the production possibility frontier of a planned economy in which output composition is fixed by the "centre" in point Ep, and does not match consumers' preferences (this point displays the deliberate violation of the Paretian condition that requires the marginal rate of transformation in production to equal marginal rates of substitution in consumption).

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