1.1.4 Production Possibility Frontiers 
Syllabus 
a) 
The use of production possibility frontiers to depict: 
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The maximum productive potential of an economy 
• 
Opportunity cost through marginal analysis 
• 
Economic growth or decline 
• 
Efficient or inefficient allocation of resources 
• 
Possi

PPFs

1.1.3 The Economic Problem 

Economics is about how scarce resources should be allocated among competing uses. 
The basic economic problem involves scarcity; we have finite resources and infinite wants. We have to choose what, how and for whom to produce.   
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What?  Super yachts for the rich or ho