A country currently is using all its land to produce wheat and grapes.However,the land most suited to growing grapes is being used to produce wheat,and the land most suited to growing wheat is being used to produce grapes.Which of the following statements is true?

Question

Quizplus · Accepted Answer

The country is not producing at its maximum potential. If it were operating along its production possibilities frontier, it would be using the most efficient combination of resources to produce the maximum amount of output. However, in this case, resources are not being allocated efficiently, and the country could produce more of both wheat and grapes if it shifted some resources from one crop to the other. Therefore, the country is operating inside its production possibilities frontier. Neither wheat nor grape production needs to be sacrificed to increase production of the other crop.

A Country Currently Is Using All Its Land to Produce