Question

Select the correct answer.

What does a production possibilities curve represent?
O A.
OB.
O C.
D.
a combination of price and demand of goods and services
a combination of the goods produced before and after a change in a factor of production
a combination of two factors of production used to produce a single good or service
a combination of two goods that can be produced using limited resources

Answer 1

Step-by-step explanation:

A production possibility curve represents the different combinations of goods or services that an economy can produce given its existing resources and technology. It shows the maximum amount of one good that can be produced for each possible level of production of the other good, assuming full and efficient utilization of resources. The curve illustrates the concept of trade-offs and opportunity cost, as producing more of one good requires sacrificing the production of another. It visually demonstrates the limitations and constraints faced by an economy in terms of resource allocation and the potential benefits of reallocating resources to different uses. By analyzing the production possibilities curve, economists can assess the efficiency, growth potential, and trade possibilities of an economy.