The country of San Ignacio produces two goods: beach towels and soccer balls. Last year, it produced at a point inside its production possibilities frontier and currently it is operating at a point on the (same) production possibilities frontier. Which statement best explains the change?

Question

Quizplus · Accepted Answer

Operating inside the production possibilities frontier indicates that not all resources were being used efficiently, such as due to unemployment. Moving to a point on the frontier suggests that San Ignacio is now using all its resources efficiently, implying a reduction in unemployment or better utilization of resources.

The Country of San Ignacio Produces Two Goods: Beach Towels