A production possibilities curve indicates the
A)Combinations of goods and services an economy is actually producing.
B)Maximum combinations of goods and services an economy can produce given its available resources and technology.
C)Maximum combinations of goods and services an economy can produce given unlimited resources.
D)Average combinations of goods and services an economy can produce given its available resources and technology.

Question

Quizplus · Accepted Answer

A production possibilities curve shows the maximum combinations of goods and services that an economy can produce given its available resources and technology. It is a graphical representation of the concept of opportunity cost, which is the trade-off between producing one good or service over another. The curve illustrates that if an economy wants to produce more of one good, it must sacrifice producing some of another good. The curve assumes that resources are limited and fixed in the short run, so it shows the maximum potential output an economy can produce.

A Production Possibilities Curve Indicates the