Answer the next question based on this production-possibilities frontier which is a type of a budget constraint:

Production-Possibilities Frontier

This production-possibilities frontier is not a straight line but has a rounded shape because:

there is no unemployment or underemployment on it.
people cannot satisfy all their wants.
resources are limited.
some resources are better in producing spinach than asparagus, and vise versa.
we must sacrifice some asparagus production to get more spinach.

Economists illustrate the idea of tradeoffs, that people can get more of one good thing only by sacrificing something else, with a:

demand curve.
cost curve.
budget line.
utility function.

Back to Reading Overview Next Page