Suppose a nation is currently producing at a point inside its production possibilities frontier.What do we know?

Question

Quizplus · Accepted Answer

If a nation is producing at a point inside its production possibilities frontier, it means that it is not using all of its available resources efficiently. This could be due to factors such as unemployment, underutilized machinery, or inefficient processes. Therefore, B is the correct choice. A is incorrect because producing beyond capacity would lead to shortages and rising prices, not inflation. C is incorrect because an efficient combination of goods would be produced at the point on the production possibilities frontier, not inside it. D is incorrect because the opportunity cost would be lower than producing at a point on the production possibilities frontier.

Suppose a Nation Is Currently Producing at a Point Inside