Efficient production and the production possibilities frontier

Efficient production and the production possibilities frontier

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Efficient production and the production possibilities frontier. In addition to the  ceteris paribus  assumption, economic analysis is often carried out under the assumption of efficient production.  According to the efficient production assumption, the economy is always using its resources and  technology to produce the  maximum  number of goods possible.  The efficient production assumption is frequently associated with the production possibilities frontier  (PPF), a graphical device that is used for economic analysis of production decisions. The PPF  measures the quantity of two goods that an economy is capable of producing with its currently  available resources and technology. While economies typically produce more than two goods, the  graphical analysis of the PPF is made easier by restricting the production possibilities of the  economy to just two goods.  Figure 
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This note was uploaded on 11/18/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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