Question

The following model shows how different combinations of goods can be produced in an economy with available resources/technology. The Circular Flow Model Production Possibilities Model (or PPF) Supply and Demand Model Perfect Competition Model Monopoly Firm Model

Answer 1

Answer:

The correct answer is production possibilities model.

Explanation:

The production possibility model in an economy shows the different combination of goods that can be produced using the available resources.

Production possibility curve shows the different bundles of goods that can be produced using the available resources. The slope of the production possibility curve represents the marginal opportunity cost of producing a good.

Each point on the curve shows full employment of all the resources. The points above the curve are unattainable because they require more resources. The points below the curve are attainable but inefficient as all the resources are not being fully utilized.