Which of the following cannot be determined by using a production possibilities curve (PPC)?

• A. The opportunity cost of producing one good over another
• B. The maximum possible output combinations of two goods
• C. The preferred combination of goods by society
• D. The combination of goods that are produced efficiently

Answer: (C)

Verified step by step guidance

1. Step 1: Understand what a Production Possibilities Curve (PPC) represents. The PPC shows the maximum possible output combinations of two goods that an economy can produce given its resources and technology.
2. Step 2: Recognize that the PPC illustrates opportunity cost, which is the trade-off between producing more of one good at the expense of producing less of another. This is shown by the slope of the curve.
3. Step 3: Note that points on the PPC represent efficient production combinations, meaning resources are fully and efficiently utilized.
4. Step 4: Identify that the PPC does not provide information about society's preferences or the preferred combination of goods, as it only shows what is possible, not what is desired or chosen.
5. Step 5: Conclude that while the PPC can determine opportunity costs, maximum output, and efficiency, it cannot determine the preferred combination of goods by society.