When a nation is in autarky (a notrade state) and maximizes its living
Standard, its consumption and production points are:
A)along its production possibilities frontier.
B)above its production possibilities frontier.
C)beneath production possibilities frontier.
D)along, above, or beneath its production possibilities frontier.

Question

When a nation is in autarky (a no­trade state) and maximizes its living
Standard, its consumption and production points are:
A)along its production possibilities frontier.
B)above its production possibilities frontier.
C)beneath production possibilities frontier.
D)along, above, or beneath its production possibilities frontier.

Quizplus · Accepted Answer

In autarky, a nation is not engaged in any trade with other countries, meaning it can only rely on its own resources and technology to produce goods and services. Therefore, it can only consume what it is able to produce. The production possibilities frontier (PPF) shows the maximum combinations of goods that can be produced with a given set of resources and technology. When a nation maximizes its living standard, it is producing and consuming at the highest point on the PPF, which means it is using all its resources efficiently and not wasting any of them. Hence, the consumption and production points are along the production possibilities frontier.

When a Nation Is in Autarky (A No­trade State) and Maximizes

When a Nation Is in Autarky (A Notrade State) and Maximizes