Chapter 2 The Production Possibility Frontier or PPF introduced in Chapter 2 is the first economic model we have met. An economic model is simply a framework or a method for organizing our thoughts about an issue. In this regard, the PPF is no different from any other economic model. The PPF helps us organize our thoughts about scarcity, efficiency and inefficiency, economic growth, and other concepts. In addition, because reality is incredibly complicated, economic models always simplify by looking at only the most important points of a problem.The PPF is no exception to this rule. The PPF vastly simplifies reality by looking at a situation in which only two products are produced. In general, what does a PPF show? As pages 47 and 48 of the textbook describe, the PPF itself shows the maximum combinations of the different goods that can be produced. For a nation's PPF, the maximum combinations depend on the nation's inputs - its land, labour, and capital - and the technology that the nation possesses. The PPF in the figure helps illustrate the lessons of a production possibilities frontier. This PPF is drawn for two goods, planes and trains; that is, the nation produces only two products, trains and planes. The nation can produce the combinations of output shown at any point on the PPF. So, if it chooses, the nation can produce 4 planes and 1 train (at point a on the PPF) or it can produce 3 trains and 3 planes (at point b) or at any other point on the PPF. Although the nation can produce any point on the PPF itself, what of points within the PPF? Can the nation produce combinations of goods that lie within the PPF? To answer this question, click on the figure below.