Suppose Germany's Production Possibilities Frontier (PPF) shows that if it builds 2 cars, it can produce a maximum of how many air-conditioning units?

• A. 0 air-conditioning units
• B. 10 air-conditioning units
• C. 6 air-conditioning units
• D. 2 air-conditioning units

Answer: (C)

Verified step by step guidance

1. Understand that the Production Possibilities Frontier (PPF) represents the maximum combinations of two goods a country can produce given its resources and technology.
2. Identify the two goods in this problem: cars and air-conditioning units.
3. Locate the point on the PPF where Germany produces 2 cars. The question asks for the maximum number of air-conditioning units at this production level.
4. Use the PPF equation or graph (if provided) to find the corresponding maximum air-conditioning units when 2 cars are produced. This involves substituting the quantity of cars into the PPF relationship and solving for air-conditioning units.
5. Interpret the result as the trade-off: producing 2 cars means Germany can produce up to that many air-conditioning units, reflecting opportunity cost and efficient resource allocation.