Production possibility frontiers show the opportunity cost of creating additional units of a product at the expense of creating fewer units of another. However, note that opportunity cost and accounting cost is different. While accounting costs show the cost of creating the product, which is usually financial, opportunity costs are the things that must be sacrificed in the creation of the product, such as resources and time. In the case of the production possibility curve, the opportunity cost of one product on the curve is directly related to the other.
The shape of the production possibility frontier demonstrates the law of increasing costs, which occurs when more and more resources have to be invested to create a product. The outward curve is explained by the lack of suitable optimal resources for production. For instance, while factories do exist for creating weapons, an increase in the production of weapons past the capacity of these optimal factories will result in the conversion of other factories from their respective products to weapons. These factories are probably not suited for the manufacturing of weapons, so they will produce fewer weapons, and more converted factories will be needed to match the amount of weapons created by the few optimal factories that produce lots of weapons. These converted factories will be producing weapons instead of their respective products, which is part of the opportunity costs of producing weapons.
Economies can operate on or inside of the production possibility frontier. Operating on the curve shows production efficiency, where the economy is producing absolutely as much as it possibly can with its resources. When economies are operating inside the frontier, they are not producing efficiently. This can be caused by inefficient use of resources or unemployment. It is the goal of every economy to operate on the production possibility frontier while producing what the society wants.
Production possibility frontiers can shift depending on the status of the economy. Innovation in technology can improve production techniques that use fewer resources for production or increase the output of the available resources. Furthermore, the general increase of available resources will shift the production probability frontier outward. The lack of resources will cause the frontier to shift inward.