IB Economics HL Practice Test 2025 – Complete Exam Prep

The term that represents the maximum combination of outputs that can be produced by an economy in a given time period is the production possibility curve. The production possibility curve (PPC) illustrates the maximum potential output combinations of two goods or services that can be produced with available resources and technology. It serves as a graphical representation of opportunity cost, efficiency, and trade-offs in production.

The curve shows the limits of production capacity, indicating the most efficient production points, where resources are fully utilized. Points on the curve represent maximum efficiency, while points inside the curve indicate inefficiency, and points outside are unattainable with the current resources. This visualization helps in understanding concepts like economic growth, resource allocation, and the effects of changing resource availability or technology.

Other options like the aggregate supply curve, demand curve, and supply curve represent different concepts in economics. The aggregate supply curve pertains to the total output of goods and services that firms in an economy can produce at various price levels, while the demand curve depicts the relationship between the price of a good and the quantity demanded by consumers. The supply curve reflects the relationship between the price of a good and the quantity supplied by producers. None of these terms directly convey the concept of maximum output combinations like the production possibility curve does