![]() In Figure 1, healthcare is shown on the vertical axis and education is shown on the horizontal axis. At D most resources go to education, and at F, all go to education. At A all resources go to healthcare and at B, most go to healthcare. This production possibilities frontier shows a tradeoff between devoting social resources to healthcare and devoting them to education. Education Production Possibilities Frontier. This situation is illustrated by the production possibilities frontier in Figure 1. Suppose a society desires two products, healthcare and education. As you read this section, focus on the similarities.īecause society has limited resources (e.g., labor, land, capital, raw materials) at any point in time, there is a limit to the quantities of goods and services it can produce. There are more similarities than differences between individual choice and social choice. This section of the chapter will explain the constraints faced by society, using a model called the production possibilities frontier (PPF). Just as individuals cannot have everything they want and must instead make choices, society as a whole cannot have everything it might want, either. Contrast productive efficiency and allocative efficiency.Explain the relationship between a production possibilities frontier and the law of diminishing returns.Contrast a budget constraint and a production possibilities frontier.Interpret production possibilities frontier graphs. ![]() By the end of this section, you will be able to:
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