Explore opportunity cost, concave and straight frontiers, economic growth, and comparative vs absolute advantage. Built for AQA, Edexcel and OCR A Level Economics.
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Set up a scenario, then ask Otti to analyse it, explain the economics, or mark your exam technique — just like a real tutor would.
Shape
Increasing opportunity cost — resources not perfectly substitutable
No shift — frontier at base position
Show second curve
Axis labels
A production possibility frontier (PPF) shows the maximum combinations of two goods an economy can produce with its existing resources and technology. It captures the economic problem in a single diagram: resources are scarce, so choosing more of one good means giving up some of the other.
Label the axes with the two goods (for example capital goods and consumer goods), label the frontier PPF₁ and any new frontier PPF₂, and mark points with letters so you can refer to them in your writing. To show opportunity cost, mark the change in each good between two points on the frontier. Distinguish carefully between a movement from a point inside the PPF to the frontier (actual growth) and an outward shift of the frontier (potential growth). In a question about investment, use the capital and consumer goods trade-off: producing more capital goods today means fewer consumer goods now but a larger outward shift of the PPF in future.
Evaluate: The PPF is a simplified model with only two goods, fixed resources and fixed technology, so it cannot show the full range of choices an economy faces. It shows what can be produced, not what should be produced: a point on the frontier is productively efficient but not necessarily allocatively efficient, because the diagram says nothing about which combination consumers want most. It also does not show how output is distributed, or how long it takes for investment to shift the frontier outwards.
Revise the theory behind this tool in our Edexcel revision notes:
Practise drawing the static versions you will need in the exam:
A PPF is concave because resources are not equally suited to producing every good. As an economy produces more of one good, it has to switch resources that are less and less suited to it, so each extra unit costs more of the other good. This rising opportunity cost makes the frontier bow outwards from the origin.
Actual growth is an increase in real output, shown by a movement from a point inside the PPF towards the frontier as unemployed resources are brought into use. Potential growth is an increase in productive capacity, shown by an outward shift of the whole PPF, caused by more or better-quality factors of production or improved technology.
Opportunity cost is the value of the next best alternative given up. On a PPF, moving from one point on the frontier to another means producing more of one good and less of the other. The amount of the second good given up is the opportunity cost of the extra units of the first good.