Which of the following is NOT true regarding the production possibilities frontier (PPF)?
A) The PPF shows the combination of goods that a country can produce given its current productivity and supply of resources.
B) The PPF illustrates the trade-offs that exist in the production of goods.
C) The PPF shows us that gains from trade are maximized when countries produce goods for which they have an absolute advantage in production.
D) The PPF illustrates the fundamental ideas of scarcity and opportunity cost.

Question

Quizplus · Accepted Answer

The PPF does not show that gains from trade are maximized when countries produce goods for which they have an absolute advantage in production. This statement refers to the principle of comparative advantage, which is different from the PPF. The PPF only shows the combination of goods that can be produced given the available resources and technology, and the trade-offs that exist between them.

Which of the Following Is NOT True Regarding the Production