The physical production possibilities frontier illustrates the different combinations of goods that society can produce given
A) the constraints of finite resources and the current state of technology.
B) a constant price level.
C) its institutional constraints.
D) the natural rate of unemployment.
E) the constraints of finite resources and the current state of technology and institutional constraints.

Question

Quizplus · Accepted Answer

The physical production possibilities frontier represents the maximum amount of goods that can be produced with the given resources and technology. Thus, it reflects the constraints of finite resources and the current state of technology. Institutional constraints or the natural rate of unemployment may impact society's ability to produce goods, but they are not directly illustrated by the production possibilities frontier. A constant price level is also not relevant to the production possibilities frontier.

The Physical Production Possibilities Frontier Illustrates the Different Combinations of Goods