No-Trade Equilibrium for the Home Firm The PPF shows the combinations of components and R&D that can be undertaken by a firm with a given amount of labor and capital. In the absence of offshoring, the firm produces at A, using quantities Q_C of components and Q_R of R&D to produce amount Y₀ of the final good. The line tangent to the isoquant through point A measures the value that the firm puts on components relative to R&D, or their relative price, (P_C/P_R)^A. Amount Y₁ of the final good cannot be produced in the absence of offshoring because it lies outside the PPF for the firm.