With reference to the "Production Possibility Frontier" (PPF), consider the following statements: 1. It represents the collection of all possible combinations of goods that can be produced with available resources. 2. A point strictly below the frontier indicates that resources are fully and efficiently utilized. 3. The curve gives the maximum amount of one good that can be produced for any given amount of the other good. Which of the statements given above is/are correct?

The correct option is 1 and 3 only. Explanation The Production Possibility Frontier (PPF), also known as the Production Possibility Curve (PPC), is a graphical representation used in economics to illustrate the concepts of scarcity, choice, and opportunity cost. It depicts the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed. Statement-wise Analysis: - Statement 1 is Correct: The PPF represents the locus of all possible combinations of two goods that can be produced using available resources and technology. It defines the production limits of an economy. - Statement 2 is Incorrect: A point strictly below (or inside) the frontier indicates that resources are either underutilized or utilized inefficiently (e.g., unemployment of labor or idle machinery). Only points lying exactly on the frontier represent the full and efficient utilization of resources. - Statement 3 is Correct: The curve defines the boundary of production capabilities. For any specific quantity of one good produced, the point on the PPF indicates the maximum possible quantity of the other good that can be produced, highlighting the trade-off involved. Key Takeaway: The Production Possibility Frontier illustrates the economic problem of limited resources. Points on the curve represent productive efficiency, points inside the curve represent inefficiency, and points outside the curve are currently unattainable.

NCERT Class 12 Economics — Chapter 1: Introduction

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With reference to the "Production Possibility Frontier" (PPF), consider the following statements:

It represents the collection of all possible combinations of goods that can be produced with available resources.
A point strictly below the frontier indicates that resources are fully and efficiently utilized.
The curve gives the maximum amount of one good that can be produced for any given amount of the other good.

Which of the statements given above is/are correct?

Official previous-year question

Verified 1 Aug 2026.

Options

A1, 2 and 3
B1 and 3 only
C1 and 2 only
D2 only

Did you get this right?

Solution

The correct option is 1 and 3 only.

Explanation

The Production Possibility Frontier (PPF), also known as the Production Possibility Curve (PPC), is a graphical representation used in economics to illustrate the concepts of scarcity, choice, and opportunity cost. It depicts the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed.

Statement-wise Analysis:

Statement 1 is Correct: The PPF represents the locus of all possible combinations of two goods that can be produced using available resources and technology. It defines the production limits of an economy.
Statement 2 is Incorrect: A point strictly below (or inside) the frontier indicates that resources are either underutilized or utilized inefficiently (e.g., unemployment of labor or idle machinery). Only points lying exactly on the frontier represent the full and efficient utilization of resources.
Statement 3 is Correct: The curve defines the boundary of production capabilities. For any specific quantity of one good produced, the point on the PPF indicates the maximum possible quantity of the other good that can be produced, highlighting the trade-off involved.

Key Takeaway:
The Production Possibility Frontier illustrates the economic problem of limited resources. Points on the curve represent productive efficiency, points inside the curve represent inefficiency, and points outside the curve are currently unattainable.

Your note

More from Chapter 1: Introduction

Consider the following statements regarding the "Mixed Economy": 1. It is an economy where both the government and the market play a role in economic activities. 2. It is an economy where all decisions are taken solely by the market. 3. India is cited as an example of a mixed economy. Which of the statements given above is/are correct?

easy

Consider the following statements regarding the fundamental nature of an economy: 1. Individuals in a society possess limited resources compared to their needs. 2. The scarcity of resources is a phenomenon faced by individuals but not by the society as a whole. 3. Compatibility between what people collectively want and what they produce is essential for an economy. Which of the statements given above is/are correct?

medium

With reference to the basic economic activities, consider the following statements: 1. Production, exchange, and consumption are considered the basic economic activities of life. 2. The problem of choice arises primarily because resources have single, specific usages. Which of the statements given above is/are correct?

easy

Consider the following statements regarding the "Central Problems of an Economy": 1. The problem of "What is produced" is unrelated to the quantity of goods to be produced. 2. The problem of "How are these goods produced" relates to the choice of technology to be adopted. 3. The problem of "For whom are these goods produced" involves determining the distribution of final goods among individuals. Which of the statements given above is/are correct?

medium

Consider the following statements regarding the allocation of resources: 1. In a market economy, allocation is determined solely by the central planning authority. 2. Allocation of resources refers to how much of which resource is devoted to the production of each good. 3. Allocation of resources has no impact on the combination of goods and services produced. Which of the statements given above is/are correct?

medium

Keep practising Chapter 1: Introduction

Work through every question from this NCERT chapter.

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The correct option is 1 and 3 only.

Explanation

Statement-wise Analysis:

Statement 1 is Correct: The PPF represents the locus of all possible combinations of two goods that can be produced using available resources and technology. It defines the production limits of an economy.
Statement 2 is Incorrect: A point strictly below (or inside) the frontier indicates that resources are either underutilized or utilized inefficiently (e.g., unemployment of labor or idle machinery). Only points lying exactly on the frontier represent the full and efficient utilization of resources.
Statement 3 is Correct: The curve defines the boundary of production capabilities. For any specific quantity of one good produced, the point on the PPF indicates the maximum possible quantity of the other good that can be produced, highlighting the trade-off involved.