Question

A certain PPF shows production possibilities for two goods, shoes and handbags. Which of the following concepts cannot be illustrated by this model? a. the tradeoff between production of shoes and production of handbags. b. the opportunity cost of shoes in terms of handbags. c. the flow of dollars between sellers of shoes and handbags and buyers of shoes and handbags. d. the effect of economic growth on production possibilities involving shoes and handbags.

Answer 1

The correct answer is the letter c. “The flow of dollars between shoe and handbag sellers and shoe and handbag buyers.”

Step-by-step explanation:

Explanation: The concept of production possibilities curve relates the maximum set of goods that can be produced in an economy given the factors of production, highlighting the trade off due to resource scarcity. The flow of money (dollars) is visible when price and quantity demanded and supplied of a particular good are related, in a relation between supply and demand.