Which of the following best describes the concept of potential output?
A)the total output that can be produced when all factors of production (land,labour,and capital)are fully employed
B)the total output that can be produced when the economy is in short-run economic equilibrium
C)the total output that can be produced when all productive resources (land,labour,and capital)are used at their maximum capacity
D)the total output that could be produced in the future when technological advances allow for a higher level of output
E)the total output that could be produced if no productive resource (land,labour,and capital)was ever left idle

Question

Quizplus · Accepted Answer

Potential output refers to the total amount of output an economy can produce when all factors of production are fully employed. This means that both labor and capital are at their maximum capacity, and there is no inefficiency or wastage of resources.

Which of the Following Best Describes the Concept of Potential