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Exhibit: Strawberries and Submarines

-(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point G. This implies that:
A) the economy can move to a point such as C only if it improves its technology.
B) the economy is experiencing unemployment and/or inefficient allocation of resources.
C) the economy lacks the resources to achieve a combination such as C.
D) people in this economy don't really like strawberries and submarines.

Question

Use the following to answer question(s): 
Exhibit: Strawberries and Submarines
 
-(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point G. This implies that:
A) the economy can move to a point such as C only if it improves its technology. 
B) the economy is experiencing unemployment and/or inefficient allocation of resources. 
C) the economy lacks the resources to achieve a combination such as C. 
D) people in this economy don't really like strawberries and submarines.

Quizplus · Accepted Answer

Point G is inside the production possibilities frontier (PPF), which implies that the economy is not using all of its resources efficiently. Therefore, there must be some level of unemployment or inefficient allocation of resources. Choice A is not correct because point C is still inside the PPF, so it could be achieved without an improvement in technology. Choice C is also incorrect because the PPF shows all possible combinations of two goods that can be produced with the given resources and technology. Finally, choice D is just a distraction and is not related to the exhibit or the question.

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