Which one of the following statements is correct?
A)Relative scarcity is no longer a central notion in economics because we are in an age of abundance.
B)Most production possibilities curves are convex as viewed from the origin.
C)The production possibilities curve shows society's preferences for consumer goods relative to capital goods.
D)The central concept underlying the production possibilities curve is that of limited resources.

Question

Quizplus · Accepted Answer

The production possibilities curve illustrates the concept of limited resources in that it displays the maximum output of two goods a society can produce with its available resources. Therefore, D is the correct statement. A is incorrect because relative scarcity is still a central notion in economics as there are always finite resources and unlimited wants. B is incorrect because the shape of the production possibilities curve depends on the nature of the goods being produced, specifically whether they have increasing, decreasing, or constant opportunity costs. C is incorrect because the production possibilities curve does not reflect society's preferences but rather the trade-offs between producing different goods given limited resources.

Which One of the Following Statements Is Correct