On the production possibilities curve, a movement between points that yields a loss of one good in order to raise the output of another good will maintain efficient production.

Question

Quizplus · Accepted Answer

This statement is true. On the production possibilities curve, a movement between points (called a trade-off) involves giving up some production of one good in exchange for increasing the production of another good. As long as the trade-off is made on the production possibilities curve, the economy is still producing efficiently. This is because any movement inside the curve represents using resources for one good that could have been used for another good, resulting in a loss of potential output.

On the Production Possibilities Curve, a Movement Between Points That