Production possibilities curve

Definition

Consider two goods $A$ and $B$, and a graph whose axes represent quantities of $A$ and $B$ respectively. Each point corresponds to a quantity of $A$ produced (its $A$-quantity coordinate) and a quantity of $B$ produced (its $B$-quantity coordinate). We say that one point dominates another if, in both coordinates, its value is at least as much as that of the latter.

The production possibilities curve or production possibilities frontier is the set of points in this graph such that it is possible to produce the quantities of $A$ and $B$ given by that point, but no point that dominates it can be achieved. In other words, it is the frontier, or boundary, of the possible quantity combinations that can be produced.

Related notions

• Indifference curve