production possibility frontier
o1 Pro.icon
The Production Possibility Frontier (PPF) is a curve that shows the maximum combination of goods and services that can be produced simultaneously at limited resources and technology level. Points on the PPF: Efficient production combination that uses up resources without waste
Inner point of PPF: Inefficient state where resources are underutilized
Points outside the PPF: Combinations unattainable with current resources and technology
PPF represents a trade-off where "producing more of one good forces the production of other goods to decrease," and the amount sacrificed at that time is the opportunity cost. It is one of the basic concepts in economics. nishio.iconNot necessarily each axis is a good, right? (I believe there was an argument for Goods space or G-space for goods and C-space for features.) o1 Pro.iconThat is correct. In general, PPF is often presented as a diagram with "multiple goods (goods and services)" as axes, but not necessarily only "the goods themselves. For example, in Lancaster's consumer theory, there is a concept called "characteristic space (C-space)" in which the axis is not the goods themselves but the characteristics (features) of the goods. In such cases, the PPF becomes a frontier that represents the maximum possible production of "combinations of characteristics," and each axis represents "which characteristics can be realized and to what extent. In other words, it is possible to think of PPF not only in terms of "goods space (G-space)" but also in terms of "space" from various perspectives. ---
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