A society that is producing its maximum combination of goods and using all available resources for production

A society that is producing its maximum combination of goods and using all available resources for production

a. has minimized its opportunity cost.

b. has maximized its opportunity cost.

c. is operating on its production possibilities frontier (PPF).

d. is operating outside its production possibilities frontier (PPF).

e. has eliminated scarcity.

Answer: c. is operating on its production possibilities frontier (PPF).

PPF is, therefore, the graphic illustration of the line-up of all the possible combinations of two goods and services that an economy is capable of producing in a certain time period given the state of technology and the resources available at the time of production. A society that is producing its maximum mix of goods and needs all the resources effectively is said to be on its PPF curve.

Any point on the PPF means the economy is utilizing all available resources efficiently because in order to produce more of good A, it has to sacrifice producing the same amount of good B. Every interior point of the PPF shows that all resources are underemployed, whereas a point outside the PPF is logically impossible because every society faces a multitude of resource constraints and unfavourable technology.