The production possibilities curve illustrates the basic principle that:
A)the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B)an economy will automatically seek that level of output at which all of its resources are employed.
C)if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D)an economy's capacity to produce increases in proportion to its population size.

Question

Quizplus · Accepted Answer

The production possibilities curve shows the maximum combination of two goods that an economy can produce with its existing resources and technology. It illustrates the principle of opportunity cost, which states that to produce more of one good, a society must sacrifice some of another good. Therefore, if an economy is producing at its maximum potential, it can only produce more of one good by producing less of another.

The Production Possibilities Curve Illustrates the Basic Principle That