Illustrates opportunity cost: Reallocating scarce resources from one product to another involves an opportunity cost. if we increase our output of capital Good (i.e. a movement along the PPF from point A to point B) then fewer resources are available to produce consumer good. Because of the shape of the PPF the opportunity cost of switching resources increases i.e. we have to give up more of Good Y to achieve gains in the output of good X.

Illustrates Scarcity: PPF illustrates the problem of scarcity by indicating the extent beyond which production is not possible i.e. it indicated that resources are scarce because you cannot produce any combination of goods outside the PPF line using the given resources. Outside the curve is
desirable but not attainable due resource constraint.

Illustrates Choice: PPF illustrates the problems of choice by indicating the various sets of commodity combination options available to the producer along the PPF i.e. the producer can produce at any point or any along the PPF.

Efficiency in production:- The PPF indicates efficiency in production by showing points of optimum output along the curve. Combinations of output situated along the PPF are the possible combinations that can be produced if the resources are fully utilized. Points inside the curve indicated under-utilization of resources.

Illustrates economic growth: Outward shift in the PPF indicates economic growth because more of both commodities can be produced using the same amount of resources. Producing more of both goods would represent an improvement in our economic welfare providing that the products are giving consumers a positive satisfaction and therefore an improvement in what is called allocative efficiency.