How to Graph a Production Possibilities Frontier in Excel 2003
Here is a step-by-step tutorial showing how to create a Production Possibilities Frontier (Curve) in Excel 2003. The concept carries forward to creating a PPC in Excel 2007, too.
If you are reading this, I presume you know what a PPC is; you just want to know how to chart it. For those who somehow just stumbled here, I provide a concise definition.
A Production Possibilities Frontier is a graphical depiction of opportunity costs; given two competing possibilities, you must choose how you wish to allocate resources to make a determination of output, but as you move to increase one item, you must trade off some amount of the other item. The maximum (optimally efficient) production possibilities are captured by the (typically) concave curve, beyond which you do not have the resources to acheive and inside the curve. The actual combination of outputs depends on preferences, a decision beyond the scope of this example.
Open a blank Excel worksheet, and enter your data in separate columns for the two possibilities. Feel free to name the data in the top row. Note that one of your columns needs to be in ascending order, whilst the other needs to be in descending order. You may enter as few as 2 data points per item and as many as Excel allows. When you are done, highlight the data range, and invoke the Chart Wizard.
Using the Chart Wizard, choose the XY (Scatter) chart type and select one of the charts with lines. Click Next when you are ready.
Though it is not necessary, you may change the name of your data series. As for me, I delete the legend for my final chart when I only have one factor of production. Click Next when you are ready.
Here is where you can name your axes. Other tabs provide additional formatting capabilities. If you wish, all of this can be done after your chart is rendered. Click Next when you are ready.
Now, you can choose whether to embed the chart or create a separate chart page. I chose to embed it. Click Finish, and you can enjoy the fruits of your labour.
I hope this helps. I will be posting how to chart opportunity costs related to comparative advantage soon.