A production possibilities frontier shows
A) that if price of one good decreases, the price of the other has to increase.
B) how money can be allocated among two kinds of goods.
C) the limits to future growth of a nation.
D) that it is impossible to produce inefficiently.
E) the various combinations of output a nation can produce at a certain time, given its available resources and technology.

Question

Quizplus · Accepted Answer

A production possibilities frontier is a graphical representation of the possible combinations of two goods that a country can produce with their current resources and technology. It shows the limits of what a country can produce in terms of the trade-off between two goods. Therefore, the correct choice is E, which states that a production possibilities frontier shows the various combinations of output a nation can produce at a certain time, given its available resources and technology.

A Production Possibilities Frontier Shows