Which of the following is NOT correct about a typical production possibilities frontier (PPF)?

• A. The PPF is always a straight line, regardless of the opportunity costs.
• B. Points inside the PPF represent inefficient use of resources.
• C. Any point on the PPF represents productive efficiency.
• D. It shows the maximum combinations of two goods that can be produced with available resources and technology.

Answer: (A)

Verified step by step guidance

1. Understand what a Production Possibilities Frontier (PPF) represents: it shows the maximum possible combinations of two goods that an economy can produce given available resources and technology.
2. Recall that points on the PPF represent productive efficiency, meaning resources are fully and efficiently utilized.
3. Recognize that points inside the PPF indicate inefficiency, where resources are underutilized or wasted.
4. Consider the shape of the PPF: it is typically bowed outwards (concave) due to increasing opportunity costs, not a straight line.
5. Conclude that the statement claiming the PPF is always a straight line regardless of opportunity costs is incorrect because opportunity costs usually increase, causing the PPF to be curved.