A curve shows all the combinations of two goods that an economy can produce when its resources are fully and efficiently used with the given technology. What is this curve called?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Production possibility frontier
The production possibility frontier (also called the production possibility curve or transformation curve) shows the combinations of two goods that can be produced when the economy’s resources are fully used. It shows the problem of choice caused by scarce resources.