A production possibilities curve shows the ________.
A) relationship between the price of a good and its quantity supplied
B) maximum production of one good for a given level of production of another good
C) different combinations of two inputs used to produce a given quantity of output
D) quantity of output produced and the amount of inputs required for the production of the output

Question

Quizplus · Accepted Answer

A production possibilities curve shows the maximum production of one good for a given level of production of another good, which is represented by the different points on the curve. It depicts the tradeoffs that a society or firm must make between two different goods or services, given the limited resources available. A production possibilities curve does not show the relationship between the price of a good and its quantity supplied (A), nor does it depict the different combinations of two inputs used to produce a given quantity of output (C) or the quantity of output produced and the amount of inputs required for its production (D).

A Production Possibilities Curve Shows the ________