Question

The production possibilities frontier

A.

is a model that assumes there is no scarcity and no opportunity cost.

B.

depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology.

C.

shows how many goods and services are consumed by each person in a country.

D.

is a graph with price on the vertical axis and income on the horizontal axis.

Answer 1

Option B is correct - Depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology.

Reason - Production possibility frontier is usually concave to the origin. It shows the combination of two goods that can produced by a country given its resources and technology. If the two goods are A and B, x axis will show the output produced of good A and y axis will show the quantity produced of good B. The slope of PPF represents opportunity cost of producing one good for the another.

Any combination of these two goods produced lying on the curve is feasible. The area below the curve represents under utilization of resources while the area above the curve represents unattainable production level.