Which of the following statements about production possibilities is true?
A) Production possibilities are limited for all countries because resources are scarce.
B) The production of food does not involve opportunity costs since people must eat.
C) Production possibilities will expand if the level of inefficiency is reduced.
D) Production possibilities are only limited for a country if prices are too high.

Question

Quizplus · Accepted Answer

Production possibilities are limited for all countries because resources are scarce. This is a basic economic principle of scarcity, which means that there are limited resources but unlimited wants and needs. Therefore, countries have to make choices about what to produce and how to allocate their resources.

B, C, and D are incorrect. B is incorrect because the production of food involves opportunity costs, as resources used for food production could have been used to produce other goods or services. C is incorrect because reducing inefficiency may improve production possibilities, but it will not necessarily expand them. D is incorrect because the limitation of production possibilities is not solely based on prices but on the availability and allocation of resources.

Which of the Following Statements About Production Possibilities Is True