The trade-off between two commodities along the Production Possibility Curve (PPC) shows
opportunity cost principle
scarcity principle
transferable output
unattainable combination
under utilization of resources
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Discussions (3)
The correct answer is A. There is a trade off between the two commodities which shows the principle of opportunity cost
The production possibilities curve shows the opportunity costs of producing two goods in an economy. An economy that is perfectly efficient will produce on the curve instead of inside or below the curve. The curve is bowed outwards because of the law of increasing opportunity costs
Greetings, The Myschool Team.
The correct answer is A(opportunity cost principle) and not D(unattainable combination). The production possibility curve shows that given a certain level of technology and resources, it is only possible to produce more quantities of one commodity when a lower level of the other is produced. This is the opportunity cost principle, which the question is interested in ("trade off between two commodities"). Unattainable combination comes in when a point is outside of the PPC, which is not the basis of this question and is not a concept illustrated by the PPC anyway. The two concepts illustrated by the PPC are opportunity cost and scarcity. Thus, A(opportunity cost principle) is the most appropriate answer. Thank you.
