It is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the production possibilities frontier. The outward-bowed shape of the ppf reflects increasing opportunity cost. The ppf is bowed outward because resources are not all equally productive in all activities. When goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit, we have achieved allocative efficiency. To make decentralized coordination work, four complementary social institutions that have evolved over many centuries are needed. Production possibilities frontier (ppf): is the boundary between those combinations of goods and services that can be produced and those that cannot. Production efficiency: if we produce goods and services at the lowest possible cost. Preferences: are a description of a person"s likes dislikes. Marginal benefit: from a good or service is the benefit received from consuming one more unit of it.