A production possibilities curve shows
A) that resources are unlimited.
B) that people prefer one of the goods more than the other.
C) the maximum amounts of two goods that can be produced, assuming the full use of available resources.
D) combinations of capital and labor necessary to produce specific levels of output.

Question

Quizplus · Accepted Answer

A production possibilities curve illustrates the different combinations of two goods that can be produced with the given resources and technology. The curve represents the maximum potential outputs of both goods, assuming the resources are being used efficiently. Hence, the correct choice is (C) the maximum amounts of two goods that can be produced, assuming the full use of available resources.

A Production Possibilities Curve Shows