"The production possibilities curve of a country illustrates both the absolute production limits and the opportunity costs confronting that nation as it chooses among output alternatives." Explain the meaning of this statement.

Question

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The Answer is The production possibilities curve (PPC) of a country represents the maximum amount of two goods or services that can be produced given the available resources and technology. It shows the trade-offs a country faces when allocating its resources between different goods or services. The curve illustrates the absolute production limits by showing the maximum possible combinations of goods or services that can be produced at a given time.

Additionally, the PPC also demonstrates the concept of opportunity cost. As a country chooses to produce more of one good or service, it must give up the opportunity to produce some of the other good or service. This trade-off is represented by the slope of the PPC, which shows the rate at which one good or service can be exchanged for another. The opportunity cost of producing more of one good or service is the amount of the other good or service that must be sacrificed.

Therefore, the statement means that the PPC not only shows the absolute production limits of a country, but also highlights the opportunity costs that the country faces as it makes decisions about how to allocate its resources among different output alternatives. It serves as a visual representation of the trade-offs and choices that a country must make in order to efficiently utilize its resources and maximize its production.

"The Production Possibilities Curve of a Country Illustrates Both the Absolute