Question

When an economy is operating at a point on its production possibilities frontier, then a. consumers are content with the mix of goods and services that is being produced. b. there is no way to produce more of one good without producing less of the other. c. equal amounts of the two goods are being produced. d. All of the above are correct.

Answer 1

Answer:

The correct answer is option b.

Explanation:

In an economy resources are scarce and have alternative uses. A production possibilities frontier shows the different bundle of two goods that can be produced using all the given resources and technology. The points on the curve show allocative efficiency. This means that the resources are effeciently allocated. So to increase production of one good we need to decrease production of other because all the resources are being employed already.