Question

The collection of all the possible combinations produced from a given amount of resources is called _______.

• A. production set
• B. production possibility set
• C. production possibility line
• D. possible production group

Answer 1

Answer: (B)

production possibility set

The set of all non-negative outputs of goods and services that can be produced using the economy's available factor inputs. The output combinations on the frontier of this set correspond to the Pareto-efficient allocation of factor inputs, i.e. the allocation at which it is not possible, given the total factor endowment, to increase the production of one good without decreasing the production of some other good.