The production possibilities frontier is a graph that shows the various
combinations of output—in this case, cars and computers—that the economy
can possibly produce given the available factors of production and the available
production technology that firms use to turn these factors into output.
An outcome is said to be efficient if the economy is getting all it can from the
scarce resources it has available. Points on (rather than inside) the production possibilities frontier represent efficient levels of production.
The production possibilities frontier simplifies a complex economy to highlight
some basic but powerful ideas: scarcity, efficiency, trade-offs, opportunity cost,
and economic growth. As you study economics, these ideas will recur in various
forms. The production possibilities frontier offers one simple way of thinking
about them.