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Production Frontier

Definition - What does Production Frontier mean?

The production frontier or production possibility frontier is a model representing the largest possible production combinations for two products or services within the constraints of available resources when they are employed to their fullest potential. It is generally drawn as a convex curve from which the combinations of production possible within resource constraints can be read.

Safeopedia explains Production Frontier

Since resources are limited, we cannot produce unlimited amounts of goods. If resources are allocated to one form of good, they are no longer available for the other. There is, thus, an opportunity cost inherent in the choice of resource allocation. For example, increased production of consumer goods would use resources and thus reduce the output of capital goods. The production frontier curve also illustrates the law of diminishing returns. The more one increases production of one type of good, the greater the number of lost units incurred by the opposing item would be.

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