Question

A small company is trying to determine the best use of its resources in producing two different goods. What resource should they develop to investigate these options?
A) marginal cost curve
B) competitive norm curve
C) supply and demand curve
D) production possibilities curve

Answer 1

I think is (D) not sure thought...

Answer 2

The correct answer is: "the production possibilities curve".

The production possibilities curve represents the efficient combinations of two goods that can be obtained using a fixed endowment of resources. When all the resources available are used, then the production mechanism is considered efficient and will be part of the production possibilities curve.

This curve also represents opportunity cost, as its slope determines the amount that has to be given up from a good, to enhance the production of the other good.

Therefore the company should choose a combination of resources established in the curve, because this guarantees that the production will be efficient and at the lowes opportunity cost.