The Production Possibilities Frontier - The Economic Lowdown Video Series, Episode 8

The Production Possibilities Frontier | St. Louis Fed

Have you been to a frontier lately? Whether you realize it or not, the economy has a frontier—it has an outer limit of economic production. In the eighth episode of the Economic Lowdown Video Series, economic education specialist Scott Wolla explains how the production possibilities frontier (PPF) illustrates some very important economic concepts.

Watch all segments of this episode:

•  Segment 1: The PPF Illustrates Scarcity and Opportunity Cost
This segment uses the fictional economy of Econ Isle to discuss how limited resources result in a scarcity problem for the economy. Econ Isle’s production possibilities are graphed to show its frontier, and then used to discuss the opportunity costs of its production and consumption decisions.

•  Segment 2: The PPF Illustrates Underemployment, Economic Expansion, and Economic Growth
This segment uses the production possibilities frontier to explain key economic ideas such as why an economy might have underemployed resources but later expand, and how changes in productivity can lead to economic growth.

•  Segment 3: The PPF Illustrates the Law of Increasing Opportunity Cost
The final segment uses the production possibilities frontier to demonstrate how, in the real world, opportunity cost increases as production increases. This is a difficult concept made simple using the PPF.

More episodes:
The Economic Lowdown Podcast Series | The Economic Lowdown Video Series

---

If you have difficulty accessing this content due to a disability, please contact us at 314-444-4662 or economiceducation@stls.frb.org.

Search for Related Resources

Audience:   College, Consumers, High School, Middle School
Language:   English
Subjects:   AP, Economics
Resource Types:   Video, Multimedia
Concepts:   Factors of Production/Productive Resources, Production Possibilities Frontier, Opportunity Cost, Scarcity, Productivity
Contact Us:
economiceducation@stls.frb.org

Contact our Economic Education Specialists

Permitted Use:
Video Overview:
Watch this video to get a concise summary of Econ Lowdown's benefits:
The Lowdown

Subscribe:
Awards: