Final answer:
The incorrect statement is 'Shifts outward when there is economic growth,' as it does not hold true for a typical production possibilities curve, which assumes fixed technology and resources.
Step-by-step explanation:
The question asks which of the following is not correct regarding a typical production possibilities curve (PPC). The correct options are those that state:
Shows the maximum combinations of two goods that can be produced.
Assumes fixed technology and resources.
Represents a trade-off between competing alternatives.
The one option that is not correct is:
Shifts outward when there is economic growth.
This statement is not accurate because it implies the scenario does not apply to a 'typical' PPC, which by definition, assumes the quantities of factors of production and the technology are fixed. However, in reality, the PPC can shift outward but only when there is an increase in resources, an improvement in technology, or economic growth.
The production possibilities frontier (PPF) is typically curved outward, not straight, depicting increasing opportunity costs as the economy moves towards producing more of one good and less of another.
The PPF shows the set of choices society faces for the combinations of goods and services it can produce given the available resources. Choices inside the PPF are wasteful because they represent levels of production where the economy is not using all of its resources efficiently.
Over time, as an economy grows due to factors such as investment in capital goods, technological advancement, or an increased labor force, the PPF tends to shift outwards, indicating that the economy can produce more goods and services than before.
A PPF is typically drawn as a curve because the law of increasing opportunity costs states that as production of one good increases, the opportunity cost of producing an additional unit of that good increases. Thus, the PPF bulges outward, reflecting the increasing trade-offs that an economy faces as it reallocates resources from the production of one good to another.