The production possibilities curve illustrates the basic principle that:

A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B) an economy will automatically obtain full employment of its resources.
C) if all the resources of an economy are in use,more of one good can be produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its population size.

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Ashrafuddeen Onana · Accepted Answer

Final Answer : C, Explanation :  The production possibilities curve shows the maximum combinations of two goods that can be produced with given resources and technology. It illustrates the concept of opportunity cost, which states that if an economy is producing at its full capacity, producing more of one good can only happen by giving up the production of some quantity of another good. Therefore, C is the best choice. A is incorrect because the law of diminishing returns implies that as more of one good is produced, the opportunity cost of producing that good increases. B is incorrect because the curve assumes that there is unemployment of resources. D is incorrect because an economy's capacity to produce depends on factors like technology, institutions, and resources rather than population size alone.

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