A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,
A) it lacks the resources necessary to produce at full employment.
B) it is utilizing some resources inefficiently.
C) it does not confront the problem of scarce goods relative to unlimited wants.
D) it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve.

Question

Quizplus · Accepted Answer

When an economy operates inside its production possibilities curve, it indicates that some resources are not being used efficiently, leading to less than maximum production potential.

A Production Possibilities Curve Graphically Represents the Maximum Quantities of Two