An economy operating inside its production possibilities curve is most likely
A) at full employment.
B) using resources inefficiently.
C) being forced to give up the production of one good to get more of another good.
D) facing a bowed-in curve.
E) producing no capital goods.

Question

Quizplus · Accepted Answer

If an economy is operating inside its production possibilities curve, it means that it is not using all of its resources to their full potential. This indicates that the economy is inefficiently using the available resources and not producing as much as it could have produced if all resources were utilized efficiently. Therefore, B is the correct answer. A is incorrect because if an economy is at full employment, it would be operating on the production possibilities curve, not inside it. C is incorrect because if an economy is being forced to give up the production of one good to get more of another good, it implies that it is operating on its production possibilities curve. D is incorrect because a bowed-in curve is characteristic of increasing opportunity costs. E is also incorrect because the production of capital goods is not directly related to an economy operating inside its production possibilities curve.

An Economy Operating Inside Its Production Possibilities Curve Is Most