Which of the following ideas is illustrated by the production possibilities curve [PPC]?

Question

Quizplus · Accepted Answer

The production possibilities curve (PPC) illustrates the concept of opportunity cost - when an economy chooses to produce a combination of goods and services, other combinations of goods and services are sacrificed. The PPC shows the trade-offs between producing two goods, and the slope of the curve shows the opportunity cost of producing one good in terms of the other. Therefore, choice D best describes the idea illustrated by the PPC. Choices A, C, and E are incorrect because they suggest that there are no limits or constraints on production, which is not true. Choice B is incorrect because it suggests that an economy can increase the production of one commodity without decreasing the production of another, which is not realistic given the concept of scarcity.

Which of the Following Ideas Is Illustrated by the Production