possibilities frontier shows the opportunity cost. By now you might be saying, “Hey, this PPF is sounding like

the budget constraint.” If so, read the following Clear It Up feature.

CLEAR IT UP

What’s the difference between a budget constraint and a PPF?
There are two major differences between a budget constraint and a production possibilities frontier. The first is the

fact that the budget constraint is a straight line. This is because its slope is given by the relative prices of the two

goods, which from the point of view of an individual consumer, are fixed, so the slope doesn't change. In contrast,

the PPF has a curved shape because of the law of the diminishing returns. Thus, the slope is different at various

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2.2 • The Production Possibilities Frontier and Social Choices 35

points on the PPF. The second major difference is the absence of specific numbers on the axes of the PPF. There are
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