Worked example · EX:economics-and-market-foundations/classify-rowan-production-points

Classify points on Rowan's production frontier

Use a linear two output frontier to distinguish feasible, productively efficient, interior, and unattainable points without treating the boundary as a forecast.

Updated Aug 7, 2026 Review due Nov 7, 2026
On this page
  1. Hold the model basis fixed
  2. Read the slope with units
  3. Keep classification separate from judgment
  4. Common wrong paths
Worked-example setupScope and assumptions
  • Rowan Advisory and every output quantity are fictional teaching facts from the linked dataset.
  • One analyst-day, technology, completion threshold, and output definitions remain fixed, and fractional output is permitted in the linear model.
  • The frontier classifies modeled combinations; it does not predict Rowan's actual production or establish that a displayed mix is desirable.
Period
One fictional analyst-day
Units
Completed reconciliations and completed forecast packages per comparable analyst-day
Rounding
Exact ratios

Hold the model basis fixed

Rowan can complete at most 12 reconciliations or 6 forecast packages in one comparable analyst-day. Every output must meet the same supplied quality threshold. The straight line between those intercepts is a deliberately simple production model, not an observed time sheet or a promise about tomorrow.

For any point, compute frontier utilization:

reconciliations / 12 + forecasts / 6

Point Reconciliations Forecasts Frontier utilization Classification
Efficient mixed 8 2 1.000 Feasible and productively efficient
Interior 4 2 0.667 Feasible but productively inefficient
Unattainable 10 2 1.167 Outside the current modeled capability

The efficient point exhausts modeled capacity. The interior point leaves capacity unused under the model. The unattainable point would require changed resources, technology, definitions, or assumptions before it could be treated as feasible.

Read the slope with units

Moving from the all-forecast intercept to the all-reconciliation intercept gives up 6 forecasts to gain 12 reconciliations. One reconciliation therefore costs 6 / 12 = 0.5 forecast. The reciprocal cost is 2 reconciliations per forecast, and the two reciprocal rates multiply to 1.

Keep classification separate from judgment

Productive efficiency says that a point is on the modeled boundary. It does not say the mix serves clients well, maximizes profit, treats workers fairly, reduces risk, or satisfies any other decision criterion. Those conclusions need values, prices, evidence, constraints, and authority not supplied here.

Common wrong paths

  • Call the interior point impossible: it is feasible; it simply does not use all modeled productive capacity.
  • Call the outside point impossible forever: it is unattainable under the current model, not under every future technology or resource set.
  • Call every frontier point best: the frontier establishes productive efficiency, not allocative desirability.

Verified calculation · economics foundations analysis

The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.

production possibilities
1 field
Inspect data
{
  "rowan_frontier": {
    "max_output_a": 12,
    "max_output_b": 6,
    "output_a_name": "reconciliations",
    "output_b_name": "forecasts",
    "points": {
      "efficient_mixed": {
        "output_a": 8,
        "output_b": 2
      },
      "interior": {
        "output_a": 4,
        "output_b": 2
      },
      "unattainable": {
        "output_a": 10,
        "output_b": 2
      }
    }
  }
}

Recomputed result

Values recomputed by the curriculum loader
MeasureValue
efficient mixed feasible1
efficient mixed frontier utilization1
efficient mixed productively efficient1
interior frontier utilization0.6667
interior interior1
opportunity cost output a in output b0.5
opportunity cost output b in output a2
reciprocal cost product1
unattainable frontier utilization1.1667
unattainable unattainable1