What is depicted by a production possibilities frontier (PPF)?

The production possibilities frontier (PPF) illustrates the maximum possible output combinations of two goods that an economy can produce with its available resources and technology. This concept reflects the trade-offs that occur when an economy allocates its limited resources to different goods. Each point on the PPF represents an efficient allocation of resources, where increasing the production of one good would require reducing the production of another good due to scarcity.

This visualization helps demonstrate key economic concepts such as opportunity cost and efficiency. When production is at a point on the curve, resources are being used efficiently. Points inside the curve indicate underutilization of resources, while points outside are unattainable with current resources. Thus, the PPF provides a comprehensive view of an economy's productive capacity and the choices it faces regarding resource allocation between different goods.