Consider the production possibilities frontier displayed in the figure shown. The fact that the line slopes downward displays which economic concept?
A) Production possibilities
B) Trade-offs
C) Specialization
D) Efficiency

Question

Consider the production possibilities frontier displayed in the figure shown. The fact that the line slopes downward displays which economic concept?
A) Production possibilities 
B) Trade-offs 
C) Specialization 
D) Efficiency

Quizplus · Accepted Answer

A downward sloping production possibilities curve represents the concept of trade-offs, as it illustrates the trade-off between producing one good or service over another. As the production of one good or service increases, the production of the other decreases, due to limited resources. Choice A is not the best choice as the question is not asking for the name of the economic concept being displayed, but rather what the downward slope represents. Choice C is not the best choice as specialization is not directly represented by the slope of the production possibilities curve. Choice D is not the best choice as the question is not asking about efficiency, although it is indirectly related to the slope of the production possibilities curve.

Consider the Production Possibilities Frontier Displayed in the Figure Shown