The production possibilities frontier illustrates the

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BlackTom AI · Accepted Answer

The question asks about what the production possibilities frontier (PPF) illustrates. 
Option 1: 'limits to people's wants.' This is a mischaracterization; the PPF is about production capacity given resources and technology, not directly about limits to desires. 
Option 2: 'goods and services that people want.' While demand influences production decisions, the PPF itself shows potential output given constraints, not consumer preferences or demand. 
Option 3: 'resources the economy possess, but not its level of technology.' The PPF incorporates both available resources and technology; stating it excludes technology is inaccurate. In fact, technology shifts the frontier outward, changing potential production. 
Option 4: 'maximum combinations of goods and services that can be produced.' This captures the core idea: the PPF maps the attainable combinations of outputs given resource and technology constraints, representing the trade-offs and opportunity costs involved. 
Option 5: 'amount of each good that people want to buy.' This confuses demand with production possibility; the PPF does not depict desired purchase quantities but potential production levels given constraints. 
Thus, option 4 best describes the PPF because it emphasizes attainable production combinations given limited resources and available technology, along with the trade-offs inherent in reallocating resources between goods.

ECON 215-002 HOMEWORK 3

The production possibilities frontier illustrates the

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