The production possibility frontier [PPF] is derived by:
A)calculating the marginal rates of technical substitution from a contract curve.
B)plotting output combinations from a contract curve.
C)plotting input combinations from a contract curve.
D)plotting input combinations from the Edgeworth box.

Question

Quizplus · Accepted Answer

The production possibility frontier (PPF) is a graph that shows the different combinations of two goods or services that can be produced with the given resources and technology. It is derived by plotting output combinations from a contract curve, which is the set of all Pareto-efficient allocations of resources. Therefore, the correct choice is B, which states that the PPF is derived by plotting output combinations from a contract curve.

The Production Possibility Frontier [PPF] Is Derived By