Chapter 2: The Economic Problem
- Define the production possibilities frontier and use it to calculate opportunity cost
- Distinguish between production possibilities and preferences and describe an efficient allocation of resources
- Explain how current production choices expand future production possibilities
- Explain how specialization and trade expand production possibilities
- Describe the economic institutions that coordinate decision
The production possibilities frontier (PPF) is the boundary between those combinations of goods and services that can be produced and those that cannot.