The production possibilities curve illustrates:
A)the minimum quantity of two resources necessary to produce a given level of output.
B)that when resources are currently being used inefficiently, it is possible to increase the production of one good only by sacrificing another good.
C)that when resources are currently being used efficiently, it is possible to increase the production of one good only by sacrificing another good.
D)the minimum quantities of output that can be produced using available resources.
E)the law of diminishing returns to scale.

Question

Quizplus · Accepted Answer

The production possibilities curve shows the maximum combination of two goods which can be produced using available resources, given current technology. It illustrates the concept of opportunity cost, which is the sacrifice of one good for another when resources are being used efficiently. As such, when resources are currently being used efficiently, it is possible to increase the production of one good only by sacrificing another good. The other options do not accurately describe the purpose of the production possibilities curve.

The Production Possibilities Curve Illustrates