Statement I.As long as we are on our production possibilities frontier,we can produce as many guns and as much butter as we want.
Statement II.In theory,a nation may be on its production possibilities frontier;in practice,no nation has ever attained this economic state.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is false because being on the production possibilities frontier means we are using resources efficiently, but we cannot produce unlimited quantities of both goods. Statement II is false because nations can and do operate on their production possibilities frontier, though it may not be constant due to changing economic conditions.