Figure 2-10 Refer to Figure 2-10. If this economy put all available resources into the production of bananas, it could produce

Question

Figure 2-10  Refer to Figure 2-10. If this economy put all available resources into the production of bananas, it could produce

Quizplus · Accepted Answer

The economy is operating on its production possibilities frontier (PPF). The points on the PPF show the maximum combination of two goods that can be produced with the given resources. In this case, the PPF shows that the economy can produce either 400 bananas or 200 baseballs, or any combination in between. However, if the economy puts all of its resources into the production of bananas, it would produce at point A on the PPF, which is 400 bananas and no baseballs. Therefore, the correct answer is C.