Econ101

Production Possibilities Frontier shows how the production of two products directly relate to one another by, if we make more of one product (X) that the production of product (Y) decrease's during any given time period with fixed resources and full efficiency. The production possibilities frontier (PPF) shows all the combinations of the two goods (X and Y) that could be produced by an economy if resources are efficiently utilized. Points on the PPF show the maximum output of the economy. When you make a choice of making one product over another, you must also consider the opportunity cost associated with that choice. Is it better to make more of product X than it is of Product Y? Points beyond the PPF are not attainable given the resource constraint and points below the PPF are feasible, but inefficient.

So if our economy made only 10 of X and 5 of Y we would be below our PPF. Although it is attainable it wouldn't be efficient. However at the same time if we made 15 of X and 15 of Y we would be beyond our resources and not be attainable.

If we were to substitute product X for fixing computers and product Y for building new computers we can see how they would affect different aspects of a computer store similar to the shop I owned and operated. When I started building my shop up, I had limited resources to complete any task that was brought to me. I had either to build a new computer or fix a computer that was brought in. I could only build two computers in a week, but I could fix six computers in that same week if I didn't build any computers. The opportunity cost was for every one computer built, three computers would not be fixed. The average price to build one computer was $1000 with a profit of $50, however the average cost to fix three computers was $200 with and average profit of $75. So if I built one computer I would lose up to $25 that week. With this

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