The production possibilities curve
A) shows all of those levels of production that are consistent with a stable price level.
B) indicates that any combination of goods lying outside the curve is economically inefficient.
C) is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.
D) shows all of those combinations of two goods that are most preferred by society.

Question

Quizplus · Accepted Answer

The production possibilities curve represents the maximum combination of two goods that a society can produce with the resources and technology available. It is a frontier that marks the boundary between the attainable and unattainable combinations of goods. Points on the curve indicate the efficient use of resources, while points outside the curve are unattainable given the current resources and technology. Therefore, choice C is the correct answer. A, B, and D do not accurately describe the purpose or characteristics of the production possibilities curve.

The Production Possibilities Curve