Question

What does a production possibilities frontier

illustrate?

Short answer

Production possibilities frontier illustrates different combination of two good that can be produced with available technologies and given resources.

Step-by-step solution

; Assumptions

1. Resources are fully utilized.
2. The resources are efficiently utilized.
3. Technique of production remains constant.
4. The resources are not equally efficient in production of all the products.

; Example

Schedule:

Combination	Wheat (good 1) ( in lakh tonnes)	cloth (good 2 ) ( in 1000 bales)
A	100	0
B	90	1
C	70	2
D	40	3
E	0	4

; Explanation

In the above table and curve we can see if all the resources are put to production of wheat then $100$lakh tonnes of wheat is produced with "$o$" of cloth and in opposite if all resources are used for production of cloth$4000$ bales is produced with '0' of wheat. Despite this we have B ( $90$lakh tonnes, $1000$bales),C (70 lakh tonnes, $2000$bales), D( $40$lakh tonnes, $3000$bales) different combination. So conclusion is if production of cloth is to be increased production of wheat has to be decreased.