Chapter 2, Problem 11P

To determine

A Production Possibility Frontier (PPF) is a locus of the various combinations of goods A and B represented along the X and Y axis respectively, such that the available resources are optimally utilized.

Answer:

Senator Long refers to point B on the graph as future production combination.

Explanation:

In the above diagram, Consumption goods are measured along x- axis and Capital goods are measured along y- axis.

For the given PPF, the points A, B, C and D diagram show the various production combinations of the Capital goods and Consumption goods shown on the two axis X and Y. The combination D is the most desirable of the production combinations with a higher number of units of both the Consumption and Capital goods. However, the combination D is unattainable given the resources or factors of production available for the production process. On the same lines of analysis, combination A is a suboptimal utilization of available resources. Combinations C and B are the points on the PPF showing the highest attainable production units among others with optimal resource utilization.

In the present context, Senator Long refers to point B on the graph as future production combination. This implies that within the resource constraint as defined by the PPF, a movement along the curve towards B shows an increased production of Consumption goods and less of Capital.