Final answer:
We cannot produce certain combinations of goods due to limited resources. Societies must make choices depicted by the production possibilities frontier, and the division and specialization of labor allows for efficient production and trade.
Step-by-step explanation:
We can't produce certain combinations of goods because of the limited resources available to society, which includes elements like labor, land, capital, and raw materials. This limitation is depicted using the production possibilities frontier (PPF), which is a model that illustrates the trade-offs and opportunity costs societies face when deciding on the mix of goods and services to produce.
In our example, consider a society that wants to produce healthcare and education. Represented by the PPF, there is a limit to how much of each good can be produced given the finite resources. If the society allocates more resources to healthcare, it will have to produce less education, and vice versa.
Furthermore, the division and specialization of labor, a concept introduced by Adam Smith, suggests that individuals and societies benefit from specializing in certain tasks and trading with others, rather than each person trying to produce everything they consume.