A production possibility frontier illustrates the _____ facing an economy that _____ only two goods.

Question

Quizplus · Accepted Answer

A production possibility frontier (PPF) shows the maximum combination of two goods that an economy can produce given its resources and technology. Therefore, it illustrates the trade-offs an economy faces when producing these two goods. The PPF shows that as production of one good increases, the production of the other good decreases. This trade-off is an important concept in economics because it reflects the reality that resources are scarce, and we have to make choices about how to use them. Therefore, the best choice is B - trade-offs; produces.

A Production Possibility Frontier Illustrates the _____ Facing an Economy