Which of the following is NOT true regarding the production possibilities frontier (PPF) ? The PPF illustrates the trade-offs that exist in the production of goods. The PPF illustrates the fundamental ideas of scarcity and opportunity cost. The PPF shows us that gains from trade are maximized when countries produce goods for which they have an absolute advantage in production. The PPF shows the combination of goods that a country can produce given its current productivity and supply of resources.

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Business

Iris Hart

14 January, 23:14

Which of the following is NOT true regarding the production possibilities frontier (PPF) ? The PPF illustrates the trade-offs that exist in the production of goods. The PPF illustrates the fundamental ideas of scarcity and opportunity cost. The PPF shows us that gains from trade are maximized when countries produce goods for which they have an absolute advantage in production. The PPF shows the combination of goods that a country can produce given its current productivity and supply of resources.

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Answers (1)

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Rigoberto Pittman · Answer 1

The correct answer is: The PPF shows us that gains from trade are maximized when countries produce goods for which they have an absolute advantage in production.

Explanation:

A production possibilities frontier is a curve that shows different combinations or bundles of two goods that can be produced using all the resources and technology available.

It represents the concept of scarcity of resources and opportunity costs. Because of the scarcity of resources we cannot increase the production of both goods. To increase the production of one good we need to sacrifice the production of others. So, there is some opportunity cost involved in producing each additional unit of output.