A production possibilities frontier shows:
A) the supply and demand for a good in a country.
B) all combinations of goods that a country can produce given its productivity and supply of inputs.
C) the uninhabited territory of a country that is full of new possibilities.
D) the goods that a country will be able to produce in the future if it continues to grow.

Question

Quizplus · Accepted Answer

A production possibilities frontier (PPF) shows all possible combinations of goods that a country can produce given its resources and technology. It demonstrates the trade-offs a country must make when choosing to produce one good over another. The PPF illustrates the opportunity cost of producing one good as measured in terms of the foregone production of the other good. In other words, the PPF helps to identify efficient production possibilities and highlights the trade-offs that a society must make when choosing how to allocate its scarce resources.

A Production Possibilities Frontier Shows