Economics is a social science and economists are confronted with a real world that is too complex and dynamic to be understood completely. One way in which economists deal with this complex reality is to build and use models that simplify the real world and help us to focus on the important forces that shape our economic lives.

In this section, we will make use of such a model, the production possibilities curve or frontier, to illustrate the problem of choice, scarcity, efficiency, inefficiency, increasing opportunity cost and change in production capacity.