Question

The _____ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

A) Production Possibility Frontier (PPF)
B) Supply and Demand Curve
C) Consumer Price Index (CPI)
D) Gross Domestic Product (GDP)

Answer 1

A production possibilities frontier (PPF) illustrates the combinations of output that a society can produce with efficient resource use.

Step-by-step explanation:

A production possibilities frontier (PPF) illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

For example, consider a society with limited resources that can be used for producing either food or clothing. The PPF will show the different combinations of food and clothing that can be produced using those resources. Points outside the PPF represent unattainable combinations, while points inside the PPF represent wasteful choices.

Over time, a growing economy will tend to shift the PPF outwards, indicating an increase in the potential combinations of goods and services that can be produced.