Question

Economists often use production possibilities graphs to determine profit. True or False

Answer 1

The statement “Economists often use production possibilities graphs to determine profit” is false

Answer: Option 2

Explanation:

A production possibility graph is used to determine and calculate how much goods can be produced with some given resources and technology with an assumption that all the resources invested in this are efficiently and effectively used.

Sometimes the graph also shows the attainable profits after implementing a profit generation strategy. Sales and costs are represented using two graph lines. When they intersect a break-even is achieved.

Sometimes this can also be used to see how profit can be generated when fixed costs and variable costs are changed. Economists often used profit graph to determine profit. It shows the possible results which can be achieved after the implementation of a profit generating plan.