The production possibilities frontier is the
A) maximum output that can be produced at an opportunity cost of zero.
B) minimum output that can be produced when resources are used inefficiently.
C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology.
D) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing.
E) maximum opportunity cost combinations of goods and services.

Question

Quizplus · Accepted Answer

The production possibilities frontier is the boundary or curve that shows the maximum combinations of two goods or services that can be produced with given resources and technology, assuming that all resources are efficiently used. Therefore, it represents the tradeoff between producing one good or service over another, and any point inside the curve represents an inefficient or underutilization of resources, while any point outside the curve represents an unattainable combination of goods or services given the current resources and technology. The other choices are incorrect because opportunity cost is not constant along the PPF, inefficiency does not define the PPF, and technology changes can shift the PPF.

The Production Possibilities Frontier Is the