Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs)for consumer goods and capital goods, but country 1 produces twice the output of both types of goods compared to country 2. It follows that
A)country 1's PPF lies further to the right than country 2's PPF.
B)country 1 has a smaller population than country 2.
C)country 1 has a bigger population than country 2.
D)country 1 is efficient and country 2 is inefficient.

Question

Quizplus · Accepted Answer

Country 1's ability to produce double the output of both types of goods indicates that it has a higher level of efficiency and/or more resources available compared to country 2. This means that country 1's PPF is further to the right (i.e. it can produce more of both goods) compared to country 2's PPF. The size of the population is not necessarily related to a country's ability to produce goods, so options B and C are incorrect. Option D does not provide enough information to determine the efficiency levels of the two countries, and therefore is also incorrect.

Both Country 1 and Country 2 Are Located on Their