MODEL OF ECONOMICS THAT IS RELATED TO PRINCIPLES

Production Possibilities Frontier

Production Possibilities Frontier (PPF) is a curve that depicts the combination of output that economy can produce with available resources and available technology. It assumes that all resources and factors will use efficiently. we have a limited resources to produce commodities if we put all resources in one commodity then we will not able to use other commodity so we have to make combination between goods to produce them.

                                                                        lets take an example, a farmer have a land to produce crops. So he is planning to produce fruits  on that land  along with the vegetables so he have limited resources(land), here he will make combination of land between vegetables and fruits. So PPF will show the combination of vegetables and fruits. If farmer wants to earn profit he have to make combination between both them and PPF will help in that.

                                                                                          PPF also creates trade-off (principle of economics) in society because if there is a more demand of fruits then farmer will produce less vegetables to earn more income so here people will face trade-offs between vegetables and fruits. Because we can produce more of one and less of others due to scarcity of resources. This also leads to one of the principle opportunity cost which is  what you give up to get it. In this farmer will give up vegetables cost to produce more fruits.