Figure 2.1
-The production possibilities curve in Figure 2.1 illustrates the notion of:
A) increased farm produce production.
B) opportunity cost.
C) increased factory goods production.
D) diminishing resources.

Question

Figure 2.1
-The production possibilities curve in Figure 2.1 illustrates the notion of:
A) increased farm produce production. 
B) opportunity cost. 
C) increased factory goods production. 
D) diminishing resources.

Quizplus · Accepted Answer

The production possibilities curve shows the maximum combinations of two goods that can be produced with available resources. It illustrates the concept of opportunity cost, as producing more of one good means sacrificing some production of the other good. The curve does not necessarily imply increased production of either farm produce or factory goods, nor does it necessarily suggest diminishing resources as a constraint.

Figure 2.1 -The Production Possibilities Curve in Figure 2.1 Illustrates the Notion