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1) The PPF: Draw a Production Possibilities Frontier (PPF) for the production of two goods, machine tools (a capital good) and donuts (a consumer good). Put machine tools on the vertical axis and donuts on the horizontal axis. Briefly explain what the PPF curve represents.

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Answer:

The diagram of the Possibilities Frontier (PPF) is shown on the first uploaded image

A Possibilities Frontier (PPF)  can also be referred to as the production possibility curve and it can be defined as a curve that denotes the production of two types of goods in an economy at a given period of time in different proportion of combinations

When this curve shift to the right it means that there is technological advancement in that economy

If this curve a points lies within it then the resources are not fully utilized    

Explanation:

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