production possibility boundary

(redirected from Transformation curve)

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Production possibility boundaryclick for a larger image
Fig. 156 Production possibility boundary.

production possibility boundary

or

transformation curve

a method of illustrating the economic problem of SCARCITY. The production possibility boundary shows the maximum amount of goods and services that can be produced by an economy at a given point in time with available resources and technology. Fig. 156 shows a production possibility boundary for motor cars and hospitals, assuming that all resources are fully employed in the most efficient way. Point A represents the maximum production of motor cars if no hospitals are produced, while point B represents the maximum production of hospitals if no motor cars are produced. At any point along the boundary, such as C, there is a trade-off between the two goods. Motor car production can be expanded only by taking resources away from the production of hospitals.

The boundary is curved rather than a straight line because not all resources are equally efficient in production of the two goods. Thus, near point A, where a large number of cars are being produced and few hospitals, large numbers of construction workers have been diverted from hospital construction to make cars, and as it is unlikely that they will be as efficient working in engineering as in construction, as we move from point C to point A the production possibility curve flattens. By contrast, near point B, where large numbers of hospitals are being built and few cars, large numbers of engineering workers have been diverted from car making to construction work, and since they are likely to be less efficient at the latter than the former, as we move from point C to point B the boundary steepens.

The point labelled U indicates UNEMPLOYMENT. More of both goods can be produced as idle resources are employed up to the limit set by the production possibility boundary. The broken line A1B1 shows how the production possibility boundary tends to move outwards over time as a result of long-term ECONOMIC GROWTH, which increases POTENTIAL OUTPUT. How far outward the boundary moves and how quickly depends upon the rate of economic growth. See OPPORTUNITY COST, LINEAR PROGRAMMING, SUPPLY-SIDE ECONOMICS, PARETO OPTIMALITY, INTERTEMPORAL SUBSTITUTION.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
Mashreq was a logical choice to partner with on this initiative, as the bank has a long history of embracing technology to drive innovation and remain ahead of the digital transformation curve. Mashreq Bank's vision is to bring those innovations into the corporate world, and the bank is dedicated to delivering next-generation digital banking experiences.
But a similar number -- 82 percent -- thought that not enough was being done to get ahead of the digital transformation curve. They can see the challenge, but do not know how to tackle it.
14 where the indicated transformation curve corresponds to a specimen whose heating cycle was interrupted at 71.6o C and held at this temperature 6 hr.
"In this age of intelligence, businesses are increasingly recognising the opportunities created by digital disruption and the need to stay ahead of the digital transformation curve. Avaya Engage presents the perfect platform for our customer and partner ecosystem to come together, experience the future and equip themselves with innovative engagement solutions, delivered by the latest technology," said Nidal Abou-Ltaif, President, Europe, Middle East and Africa and Asia Pacific, Avaya.
By leveraging our vertical industry focus, expertise and innovative technology solutions, operators today can take charge of their own transformation curve, and position themselves effectively against global competitors.
Further, the isothermal transformation curve of both the regular aging and the LDEPC added aging can be derived to reflect the effects of pulse current intuitively.
Even though there may be accelerated motion during observation, the phase transformation curve caused by motion should be continuous and smooth because of the inertial of the target.
It needs to expand its footprint in more virgin territories and Africa, on its current transformation curve, offers one of the best possibilities.
time curve intersected the transformation curve and just touched the curve in the calculated maximum cases (Fig.
After his painstaking elaboration of diminishing returns to labor leading to the theory of rent in chapter 2 of his Principles, Ricardo would have had little reason to argue that an economy's production possibility frontier is a straight line, choosing instead a production structure marked by diminishing returns to labor in agriculture that lead to a concave transformation curve. However, in this lecture he decides for pedagogical reasons to make a gradual transition to the latter by starting, as a temporary working hypothesis, with the linear "Ricardian" production model familiar to students of present-day textbooks.

Full browser ?