Answer:
B. 3 and 4 only
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 (PPC) of an economy represents the maximum combinations of finished 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 optimal and as such all resources should be used to the fullest (efficiently).
Furthermore, purchases of expanding output and obtaining the optimal combination of goods, each having a least-cost production would move an economy from a point inside its production possibilities curve (PPC) to a point on its production possibilities curve (PPC).
Generally, production points inside the production possibilities curve (PPC) indicates that an economy isn't producing goods or services at its comparative advantage.
In Economics, comparative advantage can be defined as the ability of an individual or country to produce a specific good or service at a lower opportunity cost better than another individual or country.
The comparative advantage gives a country a stronger sales margin than their competitors as they are able to sell their specific products or render their peculiar services at a lower opportunity cost.
However, it is impossible to have production points outside of the production possibilities curve (PPC).
