Within business analysis , the production possibility curve represents the various production levels of two goods requiring one resource that is available in a limited amount. For example, when an economy produces on the PPF curve, increasing the output of goods will have an opportunity cost of fewer services. 4. c. its institutional constraints. The production possibilities curve is a diagram that shows the possible combinations of two products or services that could potentially be produced within a society. B) maximum combinations of goods and services that can be produced. This curve throws light on the problems of scarcity and choice and illustrates the concept of opportunity cost which is a key concept for decision making and resource allocation. b. The production possibilities frontier illustrates a. the combinations of output that an economy should produce. The production possibilities frontier illustrates a. the combinations of output that an economy should produce. It shows businesses and national economies the optimal production levels of two distinct capital goods competing for the same resources in production, and the opportunity cost associated with either decision. The production possibilities frontier illustrates (x) opportunity cost because a choice to produce more of one good will require that production of the other good is less whenever movement occurs along the PPF. The production possibilities frontier (PPF) illustrates the combinations of goods that society can consume when trading with other producers. c. the combinations of output that an economy can produce. The final segment uses the production possibilities frontier to demonstrate how, in the real world, opportunity cost increases as production increases. Here it is not possible to produce anymore of one good without giving up some of the other good. PPF stands for the production possibility frontier and it is drawn by keeping the production on one good at x-axis and other good at y-axis. The idea of a production possibility frontier (PPF)--also sometimes called a production possibilities curve--can seem difficult. c. its institutional constraints. The production of a good has an opportunity cost. A production possibilities frontier shows the possible combinations of goods and services that a society can produce with its limited resources. Figure 2.5 "Production Possibilities for the Economy" illustrates a much smoother production possibilities curve. The production possibilities frontier is downward sloping: producing more of one good requires producing less of others. The bowed-out shape of the production possibilities curve illustrates the law of increasing opportunity cost. a. the constraints of finite resources and the current state of technology. D 9 16 A) 12 units of good X. E 12 0 B) 6 units of good X. True. A curve that illustrates the production possibilities of an economy--the alternative combinations of two goods that an economy can produce with given resources and technology. e. The following diagram (21.2) illustrates the production possibilities set out in the above table. The physical production possibilities frontier illustrates the different combinations of ? b. the combinations of output that an economy should consume. What we cannot do is something that's beyond this. Any society’s economic problems can be illustrated by using the production possibilities curve. D)any point on either the horizontal or the vertical axis. Its downward slope reflects scarcity. d. the natural rate of unemployment. A)a point inside the production possibilities frontier. Production points inside the curve show an economy is not producing at its comparative advantage. The production possibilities curve is also called the PPF or the production possibilities frontier. 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