Use the following figure.

-When the economy is operating on its production possibilities curve:
A) more of good X is produced as each additional unit of good Y is produced.
B) the same amount of good X is given up for each additional unit of good Y that is produced.
C) a decreasing amount of good X is given up for each additional unit of good Y that is produced.
D) an increasing amount of good X must be given up for each additional unit of good Y that is produced.

Question

Use the following figure.

-When the economy is operating on its production possibilities curve:
A) more of good X is produced as each additional unit of good Y is produced. 
B) the same amount of good X is given up for each additional unit of good Y that is produced. 
C) a decreasing amount of good X is given up for each additional unit of good Y that is produced. 
D) an increasing amount of good X must be given up for each additional unit of good Y that is produced.

Quizplus · Accepted Answer

When the economy is operating on its production possibilities curve, it is operating at maximum efficiency, meaning all resources are fully utilized. As a result, to produce more of good Y, increasingly more of good X must be given up due to the law of increasing opportunity costs. This reflects the concave shape of the production possibilities curve, indicating that resources are not perfectly adaptable for the production of all goods.

Use the Following Figure