A country's production possibilities boundary shows that
A)when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other good.
B)the supply for goods always exceeds the demand.
C)when a society combines its resources inefficiently, it cannot produce more of one good without producing less of the other good.
D)when a society combines its resources efficiently, it is always possible to produce more of all goods.
E)all points inside the boundary are preferred to all points on the boundary.

Question

Quizplus · Accepted Answer

A production possibilities boundary represents the maximum amount of two goods that a society can produce with its given resources and technology. When a society is producing at a point on the boundary, it is using its resources efficiently to produce a combination of the two goods. Moving outside the boundary is not possible given the current resources and technology, and moving inside the boundary represents inefficient use of resources. Therefore, producing more of one good requires sacrificing some production of the other good, leading to a trade-off between the two.

A Country's Production Possibilities Boundary Shows That