When an economy is producing inside its production possibility frontier,
A) production inefficiency occurs.
B) only technological advances will allow it to increase production.
C) it is efficient so long as it is producing what people want.
D) it must overcompensate by producing outside the curve to achieve efficiency.

Question

Quizplus · Accepted Answer

When an economy is producing inside its production possibility frontier (PPF), it means that it is not utilizing all of its resources efficiently. The PPF represents the maximum possible output that an economy can produce with its current resources and technology, so producing inside the curve indicates that some resources are underutilized or not being used to their full potential, leading to production inefficiency.

When an Economy Is Producing Inside Its Production Possibility Frontier