The production possibilities curve illustrates the basic principle that a. an economy will automatically seek that output at which all of its resources are employed. b. an economy's capacity to produce increases in proportion to its population. c. if all resources of an economy are in use, more of one good can be produced only if less of another is produced. d. no opportunity cost exists in production.

The production possibilities curve (PPC) illustrates the trade-offs and opportunity costs that an economy faces when allocating its resources between different goods. Let's analyze the options: a. **An economy will automatically seek that output at which all of its resources are employed.** - This statement is not necessarily true. While an economy may strive for full employment of resources, it does not automatically achieve it. b. **An economy's capacity to produce increases in proportion to its population.** - This statement is misleading. While population can influence production capacity, it does not directly correlate to proportional increases in production capacity. c. **If all resources of an economy are in use, more of one good can be produced only if less of another is produced.** - This statement is true and reflects the concept of opportunity cost, which is a fundamental principle illustrated by the PPC. It shows that resources are limited, and reallocating them to produce more of one good means producing less of another. d. **No opportunity cost exists in production.** - This statement is false. The PPC is specifically designed to illustrate the concept of opportunity cost, showing that producing more of one good comes at the expense of another. Based on this analysis, the correct answer is: **c. if all resources of an economy are in use, more of one good can be produced only if less of another is produced.**