Question

How does a production possibility chart assist in outlining opportunity cost?

Answer 1

A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth.

Points within the curve show when a country’s resources are not being fully utilised .

Combinations of the output of consumer and capital goods lying inside the PPF happen when there are unemployed resources or when resources are used inefficiently. We could increase total output by moving towards the PPF .