When an economy is operating at a point on (rather than inside)its production possibilities frontier,then

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If an economy is operating on its production possibilities frontier, it is producing goods at the maximum level possible with the given resources. Therefore, any increase in the production of one good would have to come at the expense of producing less of the other. This trade-off is represented by the bowed-out shape of the production possibilities frontier. If the economy is operating on a point on the frontier, it is already using all of its resources efficiently and cannot produce more of one good without producing less of the other. Choice A is incorrect because consumers may not be content with the available mix of goods and services; they may want more of one good than is currently being produced. Choice C is incorrect because the two goods may not be produced in equal amounts, depending on the specific point at which the economy is operating.

When an Economy Is Operating at a Point on (Rather