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Production Possibilities Frontier (PPF)
The shape of the production possibilities frontier (PPF) is often curved instead of straight, but why? The PPF curves because it’s a convex curve. That means that all points on the curve are lower than any point outside the curve. In other words, when you’re choosing between two products to produce, and your choice will determine how much of each product can be produced, then there is always at least one option for which producing more of one product would make less available for another.
This means that if you go past this point in either direction along the PPF, you’ll have fewer units left over to reach an equilibrium with your other opportunity costs.
A good example of when the PPF is curved is with two products cheese and wine.
Imagine that you need to choose between making more wine or more cheese for your meal tonight. If we assume that both wines are equally tasty but one has a higher demand than the other (resulting in larger opportunity costs), then it would be better to make less of the wine and more of the cheese since this would allow us to reach equilibrium faster because there’s no conflict about how much each product should cost at any point on our curve.”
However, in reality, it can be curved which has to do with opportunity cost. The reason why the PPF often looks like an arc instead of a line is due to what economists call “opportunity costs.” In economics, this term refers to any potential benefit that someone could receive if they chose not to pursue something else (i.e., time spent on one activity means less time for others). For example, when you are working at your job then you have more free time after work hours; but while you’re at home during those same times.
