Question

What does a production possibilities frontier

illustrate?

Short answer

The production possibility frontier shows, when resources are limited, the various production possibilities of two goods.

Step-by-step solution

Step 1

The production possibility frontier depicts the numerous combinations of two items that can be produced in the economy given a particular amount of resources and technology.

The marginal rate of transformation (MRT) is the slope of the PPF, which illustrates how much good $\text{'}x\text{'}$must be sacrificed in order to achieve$1$unit of good$\text{'}y\text{'}$.

Step 2

The PPF depicts the cost of producing two commodities.

Because resources are finite in society and tradeoff is necessary, if we want to expand the production of one good, we must sacrifice some production of another.