Economics @ ITT

How to Graph a Production Possibilities Frontier in Excel 2007

Posted in economics, microeconomics, tutorial by ittecon on March 14, 2010

A few days ago I create a post named How to Graph a Production Possibilities Frontier in Excel 2003, and I thought it might be helpful to demonstrate the difference regarding How to Graph a Production Possibilities Frontier in Excel 2007.

NB: I also have a post on How to Graph Specialised Growth with Two Production Possibility Curves in Excel 2010.

Excel 2007 PPC Image

As shown above, enter your production possibilities data for the two goods, and then go to the Insert tab where you will find chart options. Simply click Scatter to drop down sub-options, where you should select a graph with lines—unless you have many data points, in which case you may have enough points to see the relationship. When you click the sub-option, your chart will appear on the page.

At this point, you can configure your chart by giving titles, labels, axes, and the like. Click the chart object you created and a set of menus will appear menu to do this. I hope this helps.

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How to Graph a Production Possibilities Frontier in Excel 2003

Posted in economics, microeconomics by ittecon on March 12, 2010

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.

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