If an economy is operating at a point inside the production possibilities frontier, then
A)some of the nation's resources are unemployed
B)the production decisions are made by the government
C)unlimited resources must satisfy scarce desires
D)there is a scarcity of human resources relative to human wants therefore society must have some mechanism for making choices
E)society is paying too much for wages

Question

Quizplus · Accepted Answer

Operating inside the production possibilities frontier means that the economy is producing less than its potential. This indicates that some of the resources are not being utilized, which means they are unemployed. Option B is incorrect because the production decisions can be made by the market or individuals as well. Option C is not relevant to the given scenario. Option D is true for any economy, but it does not specifically answer the question. Option E is also irrelevant to the given scenario.

If an Economy Is Operating at a Point Inside the Production