When a nation is in autarky and maximizes its living standard, its consumption and production points are
A) along the production possibilities frontier.
B) above the production possibilities frontier.
C) beneath the production possibilities frontier.
D) beside the production possibilities frontier.

Question

Quizplus · Accepted Answer

When a nation is in autarky and maximizes its living standard, it can produce and consume at the level represented by the production possibilities frontier. Any point above the production possibilities frontier is unattainable without international trade or changes in technology, while any point below the production possibilities frontier represents underutilization of resources. Therefore, the consumption and production points of a nation in autarky and maximizing its living standard must be along the production possibilities frontier.

When a Nation Is in Autarky and Maximizes Its Living