The Production Possibilities Curve Shows

question 184

Multiple Choice

The production possibilities curve shows:

• A)the various combinations of two goods which can be produced when society uses its scarce resources efficiently.
• B)the minimum outputs of two goods which will sustain a society.
• C)the various combinations of two goods which can be produced when some resources are unemployed.
• D)the ideal, but unattainable, combinations of two goods which would maximize consumer satisfactions.

---

Definitions:

Accounting Costs

The explicit costs of a business, representing the actual outflows of cash for wages, rent, materials, and other tangible inputs.

Economic Costs

The total cost of choosing one action over another, including both explicit (direct monetary costs) and implicit (opportunity costs) factors.

Long-Run Equilibrium

A state in a market where all resources are optimally allocated and economic forces are balanced, with no tendency for change until external conditions change.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, resulting in price takers.