When an economy is operating on its production possibilities curve, more production of one good means less production of another because
A)wants are unlimited.
B)resources are limited.
C)some resources are not employed.
D)wants are limited.
E)resources are not perfectly adaptable to alternative uses.

Question

Quizplus · Accepted Answer

The production possibilities curve illustrates the maximum combinations of two goods that can be produced with given resources and technology. Since resources are limited, producing more of one good means allocating fewer resources to the production of another good. Therefore, there is a trade-off between producing different goods, and the production of one good necessarily implies an opportunity cost in terms of foregoing the production of another good.

When an Economy Is Operating on Its Production Possibilities Curve