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Production possibilities

From the beginning of your study of economics you will meet some important ideas, including notions of scarcity, opportunity cost and the use of diagrams and models. Peter Smith provides an introduction to these ideas

production possibility frontier (PPF), scarcity, opportunity cost, models, diminishing returns, marginal returns

When you begin to study economics, one of the first things that will be said to you is that economics is about scarcity. It is about how we make choices between alternative possibilities. This in turn leads to the crucial notion of opportunity cost.

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Previous

Barriers to entry

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Wage differentials: should the government intervene?

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