A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. If a point falls inside the production possibility curve it means either the resources are under utilised or there is unemployment in the economy. C) the law of increasing relative cost. All choices along the curve shows production efficiency of both goods. The PPF simply shows the trade-offs in production volume between two choices. Production possibility curve shows the different combinations of the production of two commodities that can be achieved in an economy given the resources and technology which are to be fully utilized. d. represents an increase in resources. B) indicates unemployment. A) a lack of sufficient supply. B. that resources are imperfectly substitutable among alternative uses. The following diagram (21.2) illustrates the production possibilities set out in the above table. In this diagram AF is the production possibility curve, also called or the production possibility frontier, which shows the various combinations of the two goods which … c. requires more resources than are presently available. Since the production possibilities frontier represents all of the points where all resources are being used efficiently, it must be the case that this economy has to produce fewer guns if it wants to produce more butter, and vice versa. A point lying inside the production possibilities curve a. indicates that resources are not being fully or efficiently used. B) inefficiency in production. Points within the curve show when a country’s resources are not being fully utilised The slope of the production possibilities frontier represents the magnitude of this tradeoff. A point beneath the curve indicates inefficiency, and a point beyond the curve indicates impossibility. D) the law of decreasing relative cost. 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