Friday, March 6, 2009

The production possibilities frontier is a graph that shows the combination of output that the economy can possibly produce given the available factors of production and the available production technology. Since I’m a sports fan, I’ll use basketball as my example of this. An owner of an NBA team can have a max of 25 players on his roster or a max of 20 coaches on his team. An example of efficient production would be any combination of players and coaches that falls on the production possibilities frontier line even if it means using all 25 of players or all 20 spots of coaches. It probably wouldn’t be a good idea to use all the spots on coaches but it would still be classified as an efficient output according to the Production Possibilities Frontier. An inefficient production example would be any combination of players and coaches that falls in the area inside the PPF line. An example of this would be if he had only 10 players and 5 coaches on the roster. The last type of production I’ll give an example of is impossible production. Production is impossible if it falls outside the PPF lines. That means that if this owner tried to have 20 players and 20 coaches on his roster, he would be demonstrating impossible production on the production possibilities frontier. I would guess that the success of an NBA team would depend on how they utilize their options on the PPF.

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