How is a production possibilities curve similar to a budget constraint?
What will be an ideal response?
A production possibilities curve shows the various combinations of goods or services that are possible to produce with a given amount of resources. Budget constraints show the different combinations of goods or services that are possible to consume with a given amount of income. Both the budget constraint and the production possibilities curve represent constraints that economic agents use in making optimizing decisions.
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Refer to Scenario 17.1. If the threshold educational level y* is set at 14,
A) only individuals in Group A will attain it. B) only individuals in Group B will attain it. C) individuals in both groups will attain it. D) no individuals will attain it. E) some fraction of individuals in each group will attain it.
The quantity demanded of a good
a. is the amount that would be purchased with an unlimited income b. is the amount that would be demanded even if income were zero c. is subject to the buyer's income constraints d. is a fixed amount unaffected by the buyer's circumstances e. must match the amount actually purchased in the market