A production possibilities curve shows:
A)that resources are unlimited.
B)that people prefer one of the goods more than the other.
C)the maximum amounts of two goods which can be produced assuming the full and efficient use of available resources.
D)combinations of capital and labour necessary to produce specific levels of output.

Question

Quizplus · Accepted Answer

A production possibilities curve represents the maximum output of two goods that can be produced with available resources at a given level of technology and efficient use of resources. It assumes that resources are limited and that society must choose between alternative uses for them. The curve shows the tradeoff between producing one good versus the other. Therefore, choice C is the correct answer.

A Production Possibilities Curve Shows