Which of the following is not correct? A typical production possibilities curve:?
B. reveals how much each additional unit of one product will cost in terms of the other product
C. indicates that to produce more of one product society must forgo larger and larger amounts of the other product.
D. specifies how much of each product society should produce.
Answer:
D is the answer.
A production possibilities curve simply shows what the possible bundles of two goods a society is capable of producing, but it has nothing to do with demand. To determine which bundle on the PPF is optimal, or which bundle it "should" produce, one would need to have an indifference curve to measure utility.
D is definitely wrong - it's too normative.
D, a PPF curve shows what an economy can produce, not what it "should" produce.
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