Answer to Question #196828 in Economics for Lebo

Question

Fully discuss how the production possibility frontier demonstrates the basic economic problem of scarcity.

Answer 1

A production possibility curve even shows the ​basic economic problem​ of a country having limited resources, facing opportunity costs and scarcity in the economy. Selecting one alternative over another one is known as opportunity cost. Economists use PPF to illustrate the trade-offs that arise from scarcity.