The production possibilities frontier shows:

Correct option is B

The correct answer is (B) All combinations of two outputs that can be produced with a constant level of inputs

Explanation:
• The Production Possibility Frontier (PPF), also known as a Production Possibility Curve (PPC), represents the boundary of what an economy can produce.
• It shows the maximum possible output combinations of two goods or services an economy can achieve when all resources (inputs) are fully and efficiently employed.
• Points on the frontier represent productive efficiency; points inside the frontier represent inefficiency or underutilization of resources.
• The slope of the PPF represents the Marginal Rate of Transformation (MRT), which indicates the opportunity cost of producing more of one good in terms of the other.

Information Booster:
• A shift in the PPF outward indicates economic growth, usually caused by technological advancement or an increase in the quantity/quality of resources.
• A shift inward indicates a decrease in the economy's productive capacity, such as after a natural disaster or war.
• The concave shape of the PPF (bowed outward) reflects the Law of Increasing Opportunity Costs.

Additional Knowledge:
• All combinations of two inputs (Option A): This describes an Isoquant curve, not a PPF.
• Varying levels of inputs (Option C): This relates to a production function or the Law of Diminishing Marginal Returns.
• Isoquant (Option D): An isoquant shows combinations of inputs (like labor and capital) that yield the same level of output, whereas the PPF deals with output combinations from fixed inputs.