Jeff's Production Possibilities

    Let's start with a very simple example. Suppose Jeff and Jenn both produce websites. Each of them must produce both graphic images and web pages, and each of them is somewhat skilled at both tasks. To the right we show a graph of Jeff's weekly Production Possibilities for web pages and graphic images.

    Because Jeff's PPF is a straight line, we know that the trade-off he faces between pages and images, or his opportunity cost, is constant. If he puts all his time into producing images, he can produce 30 images in a week. If he puts all his time into producing web pages he can produce 60 in a week.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved