A production possibilities curve with quantities of clothing and food on the axes shows which of the following? I. A society cannot have an unlimited amount of each good.
II) For an efficient society, an increase in clothing production will necessitate a decrease in food production.
III) A society will always produce the maximum amount of both clothing and food.
A) I only
B) II only
C) III only
D) Both I and II

Question

Quizplus · Accepted Answer

The production possibilities curve with quantities of clothing and food on the axes shows that a society cannot have an unlimited amount of each good (I). Additionally, for an efficient society, an increase in production of one good will necessarily lead to a decrease in production of the other good, so an increase in clothing production will necessitate a decrease in food production (II). Therefore, choices A and B are incorrect. However, a society may not always produce the maximum amount of both goods (III), as it may choose to produce inside the production possibilities curve due to inefficiencies or simply choosing not to fully utilize their resources. Therefore, choice C is incorrect.

A Production Possibilities Curve with Quantities of Clothing and Food