What is the classic example of a PPF?

To answer this question, it will be helpful to understand first what PPF means. PPF will be able to show the maximum possible output of the economy if all of the resources are used. If the guns and butter option would be used, this will show the available opportunity.

This means that the more weapons are produced, the more that butter will be consumed. This is not something that you are looking for. You are searching for the best output, depending on the available resources. This will make the answer letter C. The country will be called Omega, and it will be producing two goods, namely bread and butter.

What does PPF mean? This is the acronym for Production Possibility Frontier. A classic example of this is letter B. The mythical country is called Alpha and it has the chance to produce two goods which are bread and butter. These are two items that may usually go together. Plus, the various items that are needed in order to create the two goods may be related to each other.

If A would be chosen, the resources that are needed for these two separate goods may be different. Remember that in classic examples, there should be a fixed availability of the item that will be considered as a resource. The production possibility curve will usually show the maximum amount of the bread and butter that will be produced by the mythical country.