The production possibilities curve illustrates the basic principle that
a. an economy will automatically seek that output at which all of its resources are employed.
b. an economy’s capacity to produce increases in proportion to its population.
c. if all resources of an economy are in use, more of one good can be produced only if less of another is produced.
d. no opportunity cost exists in production.

The production possibilities curve (PPC) is a graphical representation that highlights the trade-offs and opportunity costs an economy faces when allocating its limited resources. When resources are fully utilized, producing more of one good inevitably means cutting back on the production of another, showcasing the fundamental principle of scarcity in economics. This creates a visual model that economists and students alike find incredibly useful for understanding efficiency and resource allocation.

In real-world scenarios, businesses often find themselves facing similar trade-offs as they decide how to allocate their time, labor, and materials among different products. For instance, a factory that manufactures both bicycles and skateboards must choose how much of each to produce based on demand, resource availability, and production capacity. This decision-making process mirrors the concepts illustrated by the PPC, emphasizing the importance of strategy and prioritization in achieving optimal production levels.