An economy can produce at any point on or inside the production possibilities frontier, but it cannot produce at points outside the frontier.

Question

Quizplus · Accepted Answer

This statement is true as the production possibilities frontier represents the maximum possible output that an economy can produce given its resources and technology. Any point inside or on the frontier represents a possible combination of producing two goods, while any point outside the frontier is not attainable with the given resources and technology.

An Economy Can Produce at Any Point on or Inside