Case Study: The Production Possibility Frontier

The PPF is the most important tool for economists. It helps them to think about scarcity and the problem of what to produce.

The Production Possibility Frontier shows the maximum possible combination of two goods that can be produced in a certain economy if all available resources are fully employed.

To explain the production possibility frontier, the economy of the state Wisconsin is taken as an example:
Wisconsin is located in the north-central USA.As of 2010; the state has a total of more than 5 million of residents. The economy of this state is driven by manufacturing, agriculture and healthcare. Although manufacturing accounts for a far greater part of the state's income than farming, Wisconsin is often perceived as a farming state. Wisconsin produces about a quarter of America's cheese. It is second in milk production in the US, second in butter production, and it ranks first nationally in the production of corn for silage, cranberries, ginseng, and snap beans for processing. Wisconsin is also a leading producer of oats, potatoes, carrots, tart cherries, maple syrup, and sweet corn for processing. (The significance of the state's agricultural production is exemplified by the depiction of a Holstein cow, an ear of corn, and a wheel of cheese on Wisconsin's 50 State Quarters design.)