The production possibilities curve illustrates which two of the following essential principles?
A)Factors of production and price signals.
B)Scarce resources and opportunity cost.
C)Market mechanisms and laissez faire.
D)Economic growth and market failure.

Question

Quizplus · Accepted Answer

The production possibilities curve shows the different combinations of goods and services that can be produced with limited resources. Therefore, it illustrates the principle of scarcity and the concept of opportunity cost - choosing one good or service means sacrificing the production of another. Factors of production (A) and price signals are not directly illustrated by the production possibilities curve. Market mechanisms and laissez faire (C) and economic growth and market failure (D) are not necessarily illustrated by the production possibilities curve, although they can be important considerations in analyzing the broader economic implications of the production possibilities curve.

The Production Possibilities Curve Illustrates Which Two of the Following