Using Figure 1.6, if an economy has the capacity to produce represented by PP1, then point E represents
A) A combination of cars and SUVs that is not attainable.
B) A constant trade-off between cars and SUVs.
C) A change in technology.
D) An efficient use of resources.

Question

Using Figure 1.6, if an economy has the capacity to produce represented by PP1, then point E represents
A) A combination of cars and SUVs that is not attainable. 
B) A constant trade-off between cars and SUVs. 
C) A change in technology. 
D) An efficient use of resources.

Quizplus · Accepted Answer

Point E represents an efficient use of resources because it is on the production possibility frontier (PPF) and therefore shows the maximum combination of cars and SUVs that can be produced with the given resources and technology.