The production possibilities curve illustrates the basic principle that: Group of answer choices A) an economy will automatically obtain full employment of its resources. B) an economy's capacity to produce increases in proportion to its population size. C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. D) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.

Question

Cassie Jefferson

Business

19 June, 12:58

The production possibilities curve illustrates the basic principle that: Group of answer choices A) an economy will automatically obtain full employment of its resources. B) an economy's capacity to produce increases in proportion to its population size. C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. D) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.

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Answers (1)

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Hugo Ward · Answer 1

The correct answer is option C.

Explanation:

The production possibility curve shows the maximum possible bundle of two goods that can be produced using all the available resources and state of technology.

Since the resources are scarce, when we produce more of one good, we need to sacrifice more and more of the other good.

If all the resources in the economy are fully employed then it is not possible to increase the production of one good without decreasing the production of the other.

The economy can thus produce either on the production possibility curve or below it but not above it.