Question : Which of the following statements is correct regarding the production possibility frontier?

I. It gives the combinations between two goods that can be produced when the resources of the economy are fully utilised.

II. It illustrates the production possibilities of the economy.

Option 1: Only I

Option 2: Only II

Option 3: Both I and II

Option 4: Neither I nor II


Team Careers360 16th Jan, 2024
Answer (1)
Team Careers360 25th Jan, 2024

Correct Answer: Both I and II


Solution : The correct answer is Both I and II.

A graph known as the production possibilities curve (PPC) illustrates every possible output combination that is currently possible with available resources and technological advancements. The PPC, also known as the production possibilities frontier (PPF), is a diagram that shows trade-offs and scarcity.

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