The production possibility curve:
A) is convex to the origin.
B) is based on the law of diminishing returns.
C) is the boundary between attainable and unattainable outputs.
D) reflects the mixed economy found with most economic systems.

Question

Quizplus · Accepted Answer

The production possibility curve represents the maximum amount of output that an economy can produce with its existing resources and technology. It is the boundary between attainable and unattainable outputs, meaning any combination of goods and services that lie inside the curve are possible to produce, whereas any combination outside the curve is unattainable given the current resources and technology. The curve is typically shaped as convex to the origin, indicating the law of diminishing returns, which states that as more and more resources are applied to production, output increases at a decreasing rate. The production possibility curve does not necessarily reflect the mixed economy found with most economic systems.

The Production Possibility Curve