The trade-off between two commodities along the Production Possibility Curve (PPC) shows
- transferable output
- unattainable combination
- scarcity principle
-
opportunity cost principle
The correct answer is: D
Explanation
The Production Possibility Curve represents the various combinations of two goods or commodities that can be produced with limited resources and technology. It reflects the trade-offs a society or individual faces when allocating resources between different goods or activities.
As you move along the PPC, producing more of one commodity requires sacrificing the production of the other commodity. This trade-off is known as the opportunity cost. The opportunity cost is the value of the next best alternative foregone when a choice is made.
For example, if an economy decides to produce more consumer goods, it must allocate fewer resources to producing capital goods. The opportunity cost of producing more consumer goods is the foregone production of capital goods.