A production possibility set (also known as a production possibility frontier or curve) is a graphical representation of the maximum possible output combinations of two goods or services an economy can produce with a given level of resources and technology. It is a visual representation of the trade-offs associated with allocating resources between the two goods. The production possibility set illustrates the concept of opportunity cost, which is the cost of one good in terms of the other. It also shows the effects of economic growth, as an outward shift in the production possibility set indicates an increase in the economy’s productive capacity.
