A Production Possibility Frontier (PPF) is a curve that shows utilization of resources to achieve two economic goals. It shows tradeoff of resources such as financial, technological, labor etc. and provides a view of maximum possible level of production of one commodity.
With the help of PPF, we can understand scarcity of resources and their availability for each economic objective as well as possible combinations for tradeoff. By analysing these combinations, a country can effeciently utilize its resources.
The concept is simple, if you have a budget of $100 million for both military and food, you can spend anything from zero to hundred million on one of them and rest is available for the other.
We can apply this concept on Pakistani economy by taking example of Military spending and Spending on Education. Both are very important areas but lets see what Government of Pakistan decides to spend on each and what possibilities PPF curve provides. The data used is in terms of "Percet of GDP".
There is an inverse relationship between the two variables because as soon as one increases, the other decreases with the same proportion. Out of 6% of GDP you can not spend 3 or Military and 4 on Education because after spending 3%, there is only 3% left.
From consumer point of view the same is called Indifference Curve i.e. Food vs Clothing decision. An individual consumer will almost behave the same way as a nation if they have budget constaint.
| Education | Military |
| 0 | 6.2534 |
| 0.5 | 5.7534 |
| 1 | 5.2534 |
| 1.5 | 4.7534 |
| 2 | 4.2534 |
| 2.5 | 3.7534 |
| 2.75792 | 3.49548 |
| 3 | 3.2534 |
| 3.5 | 2.7534 |
| 4 | 2.2534 |
| 4.5 | 1.7534 |
| 5 | 1.2534 |
| 5.5 | 0.7534 |
| 6 | 0.2534 |
|