Refer to the above diagram.If the production possibilities curve for an economy is at AB but the economy is operating at point 4, the reasons are most likely to be because of:

Question

Quizplus · Accepted Answer

If the economy is operating at point 4, it means it is producing less than its maximum potential (point A on the production possibilities curve). This could be due to factors such as lack of demand for certain goods and services, or inefficiencies in production processes. Factors such as supply and environmental factors (choice A), labour inputs and productivity (choice C), and technological progress (choice D) may affect the production possibilities curve itself, but they are not the most likely reasons for an economy to operate below its potential.

Refer to the Above Diagram