A Production Possibilities Frontier demonstrates that:

Question

Quizplus · Accepted Answer

The Production Possibilities Frontier shows the maximum possible combinations of two goods that can be produced with given resources and technology. Each point on the curve shows a specific combination of the two goods that can be produced with full efficiency. Therefore, a large number of output combinations can be produced with the same level of inputs, making option B the correct choice. Option A is incorrect as the combinations of inputs are fixed for a given level of output. Option C and D are also incorrect as costs and revenues can vary at different levels of output.

A Production Possibilities Frontier Demonstrates That