Production Possibility Curve Labels Trade-Offs Between Goods

Steps:

• Recall that a PPC illustrates maximum output combinations of two goods with fixed resources.
• Identify axes: vertical for one good's output, horizontal for the other's.
• Eliminate options with inputs or costs, as PPC focuses on outputs.
• Select the option showing two outputs on axes.

Why D is correct:

• PPC definition requires axes labeled with quantities of two different goods, like rice and sugar, to show opportunity cost and efficiency.

Why the others are wrong:

• A: Uses inputs (capital, labour), not outputs; PPC graphs production frontiers, not input combinations.
• B: Vertical axis shows cost, irrelevant to PPC which plots output trade-offs, not costs vs. quantity.
• C: Vertical axis is output, but horizontal is input; PPC needs both axes as outputs for two goods.

Final answer: D