DE 01

9. The production possibilities curve tells us:

A. The specific combination of two products that is most desired by society.

B. That costs do not change as society varies its output.

C. Costs are irrelevant in a society that has fixed resources.

D. The combinations of two goods that can be produced with society's available resources.

10. Which of the following will shift the production possibilities curve to the right?

A. An increase in the unemployment rate from 6 to 8 percent.

B. A decline in the efficiency with which the present labor force is allocated.

C. A decrease in the unemployment rate from 8 to 6 percent.

D. A technological advancement that allows farmers to produce more output from given inputs.



Answer :

Final answer:

A production possibilities curve illustrates an economy's potential production combinations and reflects the impact of scarcity and comparative advantage.


Explanation:

A production possibilities curve shows the combinations of two goods an economy is capable of producing. The downward slope of the production possibilities curve is an implication of scarcity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage.


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