A production possibility curve shows the

Step 1: Analyze the question The question asks what a production possibility curve (PPC) shows. It tests whether you know the basic definition from the topic of scarcity, choice and opportunity cost.

Step 2: Explain the concept A production possibility curve (also called a production possibility frontier) is a graph that shows the different combinations of two goods or services that an economy can produce when it uses all its available resources fully and efficiently, with technology unchanged.

Key ideas it illustrates:

• Scarcity: resources are limited, so the economy cannot produce unlimited quantities of both goods.
• Choice: producing more of one good means producing less of the other.
• Opportunity cost: the amount of one good given up to produce more of the other.
• Efficiency: points on the curve use resources fully, points inside show underutilised resources, and points outside are unattainable with current resources.

Step 3: Evaluate the options

• A. Resources used to produce a particular commodity: Wrong. The PPC does not track the inputs for a single commodity.
• B. Possible combinations of two commodities: Correct. This is exactly the definition of the PPC.
• C. Rate of inflation: Wrong. Inflation is a price-level issue and has nothing to do with the PPC.
• D. Rate of unemployment: Wrong. A PPC can hint at unemployment if the economy sits inside the curve, but it does not show the rate.
• E. Tabular illustration of production possibilities: Close, but wrong. A table is called a production possibility schedule. The curve is a graph.

Step 4: Answer

Tip: Remember the PPC as "Possible Combinations". Whenever you see "curve" in an economics question, think "graph", not "table". The table version is the "schedule", and this difference often separates options B and E.