Question

The economy is at a point below the production possibilities curve. What is the most likely explanation for this?

a. All resources are not being utilized or a technical inefficiency exists in the production process
b. A technical efficiency exists in a production process
c. All of the above
d. All resources are being utilized

Answer 1

a. All resources are not being utilized or a technical inefficiency exists in the production process

Step-by-step explanation:

The production possibility frontier shows the two combinations of good an economy can produce when its resources are fully utilised.

Production point on the curve are efficient

Points inside the curve means production is inefficient ortechnical inefficiency exists.

Points outside the curve are unattainable given the economy's resocurces and technology