Maximum efficiency. Explain how the four economic ideas below are illustrated by the production possibilities curve. B. Attainable combinations of both goods below the curve. Production Possibilities. Production Possibilities 1.3 Trade offs and opportunity costs can be illustrated using a Production Possibilities Curve. Suppose the country of Maverick has specialized in the production of a good but has not yet entered into trade. using resources in such a way as to maximize the production of goods and services. B. Points on the interior of the PPC are inefficient, points on the PPC are … asked by trista on January 12, 2009; econ. Which of the following scenarios are illustrated in this particular PPC? We cannot increase the output of one good without decreasing the output of another. A production possibilities curve shows the combinations of two goods an economy is capable of producing. A. Opportunity Costs – The loss of potential gain from other alternatives when one alternative is chosen. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. Given the supplies of factors, if the productive efficiency of the economy improves by technological progress, its production possibility curve will throughout shift outwards to P 1 P 1 . Date: Facilitator: School: 1.04 PPF Basics 1. Efficiency. PPC—shows all the possible combinations of 2 goods or services. Perhaps the most fundamental concept to economics, opportunity cost is what must be given up in order to undertake any activity or economic exchange. a line on a production possibilities curve that shows the maximum possible output an economy can produce. Sort by: Top Voted. The downward slope of the production possibilities curve is an implication of scarcity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. The production possibilities frontier can illustrate two kinds of efficiency: productive efficiency and allocative efficiency. The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Every choice about the use of a resource comes with an opportunity cost, and these choices can be illustrated in a simple model called the Production Possibilities Curve (PPC). Comparative advantage and the terms of trade . efficiency. Explain how production possibilities curves show efficiency, growth, and cost. Given 2 assumptions: 1. Fixed resources 2. A. Scarcity – Limitations – insufficient resources, goods, or abilities to achieve the desired ends. 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