The production possibilities curve illustrates the basic principle that:
A)the production of more of any one item will in time require smaller and smaller sacrifices of other items
B)an economy automatically seeks that level of output that employs all of its resources
C)if all the resources of an economy are fully used, more of one item could be produced only if less of another item is produced
D)any production point below the curve reflects high opportunity cost
E)any production point above the curve reflects low opportunity cost

Question

Quizplus · Accepted Answer

The production possibilities curve shows the maximum amount of two goods that an economy can produce given its resources and technology. This means that an economy can only produce more of one good if it sacrifices some production of the other good. Therefore, if all the resources of an economy are fully utilized, producing more of one item could only happen if less of another item is produced, which is illustrated by points on the curve.

The Production Possibilities Curve Illustrates the Basic Principle That