A production possibilities frontier shows
A)that if price of one good decreases,the price of the other has to increase.
B)the limits to future growth of a nation.
C)how money can be allocated among two kinds of goods.
D)that it is impossible to produce inefficiently.
E)the various combinations of output a nation can produce at a certain time,given its available resources and technology.

Question

Quizplus · Accepted Answer

A production possibilities frontier (PPF) shows the various combinations of output a nation can produce at a certain time, given its available resources and technology. It illustrates the concept of opportunity cost, as producing more of one good means producing less of another good. The PPF also shows the limits to future growth of a nation, as it is a representation of the maximum possible output with the given resources and technology. It does not relate to the prices of goods or production efficiency.

A Production Possibilities Frontier Shows