Question

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model? a. the effect of economic growth on production possibilities involving jewelry and clothing b. the tradeoff between production of jewelry and production of clothing c. the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing d. the opportunity cost of clothing in terms of jewelry

Answer 1

Answer:

C: The flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing.

Explanation:

Production possibility curve shows various combinations of two different products that a firm can produce given a limited resources. The maximum that a firm can produce is represented along the curve. Area under the curve represents inefficient use of resources and area above the curve is out of reach because of limited resources.

Option C cannot be illustrated by PPF.