The production possibilities curve represents
A) the maximum amount of labor and capital available to society.
B) the combinations of goods and services among which consumers are indifferent.
C) the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources.
D) the maximum rate of growth of capital and labor in a country.

Question

Quizplus · Accepted Answer

The production possibilities curve represents the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. It shows the trade-off between producing two different goods with limited resources. It does not represent the maximum amount of labor and capital available to society or the combinations of goods and services among which consumers are indifferent. It also does not represent the maximum rate of growth of capital and labor in a country.

The Production Possibilities Curve Represents