What is the term for a graph showing the maximum possible production of one good for every possible output level of another good?

What is the term for a graph showing the maximum possible production of one good for every possible output level of another good?

• A. Demand Curve
• B. Production Possibility Curve
• C. Supply Curve
• D. Production Possibility Frontier

Answer: (B)

The idea being tested is how production possibilities are illustrated when resources and technology are fixed. The graph that shows the maximum amount of one good that can be produced for every given quantity of another good is called the Production Possibility Curve. It marks the boundary of what’s feasible with current resources. Points on the curve represent efficient combinations; points inside show underutilized resources, and points outside aren’t achievable. The slope shows the opportunity cost of reallocating resources from one good to the other, and the curve is usually bowed outward because not all resources are equally good at producing every good. The Production Possibility Frontier is basically the same idea described with a different emphasis on the boundary, but the curve term is the standard label for this question.

The idea being tested is how production possibilities are illustrated when resources and technology are fixed. The graph that shows the maximum amount of one good that can be produced for every given quantity of another good is called the Production Possibility Curve. It marks the boundary of what’s feasible with current resources. Points on the curve represent efficient combinations; points inside show underutilized resources, and points outside aren’t achievable. The slope shows the opportunity cost of reallocating resources from one good to the other, and the curve is usually bowed outward because not all resources are equally good at producing every good. The Production Possibility Frontier is basically the same idea described with a different emphasis on the boundary, but the curve term is the standard label for this question.