Moving along the production possibilities frontier itself illustrates
A)the existence of unemployment of some factors of production.
B)how tradeoffs need not occur if the economy is efficient.
C)how free lunches can be exploited through trade.
D)the benefits of free lunches.
E)the existence of tradeoffs.

Question

Quizplus · Accepted Answer

Moving along the production possibilities frontier demonstrates the concept of tradeoffs. As a society produces more of one good, it must give up some production of another good. This opportunity cost is what creates the curve of the production possibilities frontier. Therefore, the correct answer is (E) the existence of tradeoffs.

Moving Along the Production Possibilities Frontier Itself Illustrates