The correct option is 1 and 3 only.
Explanation
The Production Possibility Frontier (PPF) is a graphical representation showing the various combinations of two goods that an economy can produce when all available resources are fully and efficiently utilized, given the state of technology.
Statement 1 is Correct: The PPF illustrates the fundamental economic concept of scarcity. The curve represents a boundary or limit to production. Points outside the frontier are unattainable because the economy does not have enough resources to produce those combinations, highlighting that resources are finite.
Statement 2 is Incorrect: The PPF is based on the assumption that resources are limited (fixed) at a specific point in time. It explicitly contradicts the notion of unlimited resources. If resources were unlimited, there would be no frontier, and the economy could produce infinite amounts of all goods.
Statement 3 is Correct: The PPF demonstrates opportunity cost. As an economy moves from one point on the curve to another to produce more of one good, it must decrease the production of the other good. The slope of the PPF represents this trade-off, quantifying the opportunity cost of the additional production.
Key Takeaway: The Production Possibility Frontier serves as a model to demonstrate the constraints imposed by scarcity and the inevitable trade-offs (opportunity costs) involved in resource allocation.