Production Possibility Frontier and Graphical Illustration

Question

Describe what a production possibility frontier (PPF) is and illustrate a graph for a two –good economy which, if it used all its resources, can produce either 20 smart phones or 85 computers, or some combination of the two.

Explain what the opportunity costs are (there will be one for smart phones and one for computers) and calculate them for this examples then indicate at least two other points on the Production Possibility Frontier (PPF). And associated quantity of phones and computers) which shows different combinations of the two goods that can be produced in this economy, if all resources are used (assume constant opportunity cost). Finally, explain the difference between a feasible efficient production point and a feasible but not efficient production point and illustrate both on your graph.

Summary

This question belongs to economics and discusses about production possibility frontier with graphical illustrations.

Word count: 694