Question

The production possibilities curve represents: a) The maximum amount of labor and capital available for production. b) Combinations of goods and services among which consumers are indifferent. c) Maximum combinations of products available with fixed resources and technology. d) The maximum rate of growth of capital and labor in an economy.

Answer 1

Answer:

c) Maximum combinations of products available with fixed resources and technology.

Explanation:

The production possibilities curve (PPC) is also known as the production possibilities frontier (PPF) and its a curve which illustrates the maximum (best) combinations of two products that can be produce in an economy if they both depend on these factors;

1. Technology is fixed.

2. Resources are fixed.

Hence, the production possibilities curve represents maximum combinations of products available with fixed resources and technology. This ultimately implies that the manufacturing or production of one item (product) is likely to rise or increase provided the production of the other item (product) falls or decreases.

Additionally, the production possibilities curve influences the choice of production used by companies and as such it helps to make the best decision regarding the optimum product mix for a company. This simply means that, all points in a production possibilities curve is efficient and resources should be used efficiently or to the fullest.