I have a graph- a PPF curve- and I have a question asking me to find the production point on the graph. Where is the Production point, and how do I find it?
you need to have two items that you intend to manufacture, graph one on the horizontal axis, the other on the vertical axis. For example, Tanks and guns are the two products you intend to produce. As you produce more of one and less of another, you should be on the PPF line (bowed out). As you produce less of one and more of another, your seeing what people refer to as "opportunity cost." Basically what you gain AND give up to produce more of one and less of another. The PPF has three areas. 1) Beyond PPF: means technology and or resources are not available to to produce to that point yet. A good example is old phones and cell phones. In the early 70's dial phones were possible by technology, but new technology in the 90's helped propel cell phones to become the new rage on a mass level. 2) On the PPF: implies all resources are being used efficiently. 3) Inside the PPF: represents inefficiency.