The fundamental reason that a production possibilities curve has a negative slope is that
A) workers are inefficient.
B) resources are of low quality.
C) resources are fixed and therefore trade-offs must be made.
D) it has empirical support but why it is so is still a mystery.
E) comparative advantage exists.

Question

Quizplus · Accepted Answer

A production possibilities curve represents the maximum combination of two goods that a society can produce with its existing resources and technology. As resources are fixed, if a society decides to produce more of one good, it must give up some of the production of the other good. This trade-off results in a negative slope of the production possibilities curve, indicating the opportunity cost of producing one good in terms of the other. Therefore, the correct choice is C.

The Fundamental Reason That a Production Possibilities Curve Has a Negative