PPF

The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations
of output of two goods that can be produced using available resources and technology. The PPF
captures the concepts of scarcity, choice, and tradeoffs.
The law of diminishing returns holds that as additional resources are devoted to
producing a good, the marginal increase in output will become smaller and
smaller.

The only way for the curve to move outward to point Y is if there were an improvement
in cotton and grape harvesting technology because the available resources—land, labor,
and capital—generally remain constant

When the PPF shifts outwards, it implies growth in an economy. When it shifts inwards,
the economy is shrinking due to a failure to allocate resources and optimal production
capability.
There are four common assumptions in the model:

1. The economy is assumed to have only two goods that represent the market
2. The supply of resources is fixed or constant
3. Technology and techniques remain constant
4. All resources are efficiently and fully used