Suppose the production possibilities frontier (PPF) of an economy has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point inside the PPF represents _____
A) a larger quantity of capital goods than that represented by a point along the PPF.
B) an inefficient output combination of the two goods in the economy.
C) an unattainable output combination of the two goods in the economy.
D) an output combination of more consumer goods than capital goods.
E) a larger quantity of consumer goods than that represented by a point along the PPF.

Question

Quizplus · Accepted Answer

A point inside the PPF represents an inefficient output combination of the two goods in the economy. This means that the economy can produce more of one good without sacrificing the production of the other good. An efficient output combination would be represented by a point on the PPF, while an unattainable output combination would be represented by a point outside the PPF.

Suppose the Production Possibilities Frontier (PPF) of an Economy Has