The production possibilities curve is
A) the boundary that divides all production combinations into efficient ones and inefficient ones.
B) a graph illustrating the production combinations society would like to choose.
C) the boundary that divides all production combinations into attainable ones and unattainable ones.
D) a convex (bowed into the origin)curve illustrating production trade-offs.
E) the boundary that divides all production combinations into good ones and bad ones.

Question

Quizplus · Accepted Answer

The production possibility curve is the boundary that divides all production combinations into attainable ones and unattainable ones. It represents the maximum potential production of two goods, given a fixed amount of resources and technology. The curve shows that by producing more of one good, society must give up some of the production of the other good. The curve is bowed outward due to the law of increasing opportunity cost, which states that as production of one good increases, the opportunity cost of producing an additional unit of that good increases. Therefore, choices A, B, D, and E are incorrect.

The Production Possibilities Curve Is