Question

A trade-off is:

• A. A transaction at a price either above or below the equilibrium price
• B. Represented by a point outside a PPF
• C. Represented by a point inside a PPF
• D. A constraint that requires giving up one thing to get another

Hint:

Think about resource constraints.

Answer 1

The Correct Option is D

A trade-off in economics refers to the concept where in order to gain something, you must give something up. The production possibilities frontier (PPF) shows all possible combinations of two goods that can be produced with available resources.

A trade-off is not just represented by a point outside the PPF; it is more fundamentally about the constraint of making choices. In other words, to gain one thing, something else must be given up. This implies scarcity and the need for choices.

Thus, the correct answer is (d).