Suppose a nation is currently producing at a point inside its production possibilities frontier. What do we know?
A) The nation is producing beyond its capacity, and inflation will occur.
B) The nation is not using all available resources and is inefficient.
C) The nation needs improved technology in order to produce an efficient combination of goods.
D) There will be a large opportunity cost if the nation tries to increase production.

Question

Quizplus · Accepted Answer

If a nation is producing at a point inside its production possibilities frontier, it means that it is not using all available resources efficiently. Therefore, it has the potential to produce more of at least one good without sacrificing the production of another good.

Suppose a Nation Is Currently Producing at a Point Inside