Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It shows the maximum output combinations of two goods given limited resources.
B
It indicates the total cost of producing a single good.
C
It demonstrates how to eliminate all opportunity costs.
D
It represents consumer preferences in a market.
Understanding the Answer
Let's break down why this is correct
Answer
The production possibilities frontier (PPF) is a curve that shows the maximum combination of two goods that an economy can produce with its resources. It illustrates the concept of opportunity cost, which is what you give up when you choose one option over another. For example, if a country can produce either 100 cars or 200 bicycles, and it decides to make 80 cars, it might only be able to produce 160 bicycles. This means the opportunity cost of making those 80 cars is the 40 bicycles that could have been produced instead. So, the PPF helps us understand that to increase the production of one good, we often have to reduce the production of another, highlighting the trade-offs we face in decision-making.
Detailed Explanation
The PPF shows how much of two goods can be made with limited resources. Other options are incorrect because This option suggests that the PPF shows the total cost of one good; This choice implies that the PPF can remove all opportunity costs.
Key Concepts
production possibilities frontier
Topic
Understanding Opportunity Costs
Difficulty
easy level question
Cognitive Level
understand
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