1.3 Production Possibilities

What does a Production Possibilities Curve (PPC) illustrate?

• The maximum profit a company can achieve.

• The different combinations of two goods that can be produced using full employment of resources.

• The relationship between supply and demand in a market.

• The total amount of money circulating in an economy.

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What does a production point located inside the Production Possibilities Curve (PPC) indicate?

• The economy is producing at its maximum potential.

• The production of both goods is impossible.

• Resources are not being used to their fullest potential.

• There is an increase in available resources.

What does a production point located outside the Production Possibilities Curve (PPC) signify?

• The economy is operating efficiently.

• The production level is currently unattainable with existing resources.

• There is an abundance of unused resources.

• The economy is experiencing economic growth.

Based on the provided table, what is the opportunity cost of moving from combination A to combination D?

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What does a straight-line Production Possibilities Curve (PPC) indicate about opportunity cost?

• Increasing opportunity cost.

• Decreasing opportunity cost.

• Constant opportunity cost.

• Zero opportunity cost.