Interpreting the Production Possibility Curve for Output Combinations

Steps:

• Identify the PPC curve, with good X on the horizontal axis and good Y on the vertical axis.
• Locate point P on the curve, representing efficient production.
• To produce 100 units of X, trace horizontally from the X-axis at 100 to intersect the PPC.
• Read the corresponding Y value from the vertical axis at that intersection point.

Why B is correct:

• The PPC shows maximum feasible combinations; at 100 units of X, the curve intersects Y at 50 units, per the opportunity cost trade-off in resource allocation.

Why the others are wrong:

• A: 40 units of Y lies inside the curve, indicating inefficient production.
• C: 100 units of Y suggests no trade-off, which contradicts the PPC's downward slope.
• D: 110 units of Y is above the curve, representing unattainable output with current resources.

Final answer: B