The production possibilities frontier (PPF) demonstrates efficiency by acting as a visual representation of the different combinations of goods and services which can be produced when a system is run at maximum efficiency.
Work Step by Step
The frontier is bowed outwards due to the law of diminishing returns. On the curve, when capital production of "X" increases, the production of "Y" decreases and vice versa. These demonstrate efficiency by giving a visual demonstration of trade-offs and opportunity cost.