The fundamental idea behind the production possibilities frontier is:
A) the idea of absolute advantage.
B) the trade-offs that exist in production.
C) that economic growth is unlimited.
D) that incentives matter.

Question

Quizplus · Accepted Answer

The production possibilities frontier (PPF) illustrates the combinations of two goods that a society can produce given the resources and technology available. The PPF reflects the trade-offs involved in production because the production of one good requires giving up the opportunity to produce another good. The PPF shows the maximum production level of one good that can be produced in relation to the production level of the other good, and thus shows the opportunity cost of producing one good in terms of the other. Therefore, the fundamental idea behind the PPF is the concept of trade-offs in production.

The Fundamental Idea Behind the Production Possibilities Frontier Is