Which of the following is not true for a nation that is in equilibrium in isolation?
A)It consumes inside its production frontier
B)it reaches the highest indifference curve possible with its production frontier
C)the indifference curve is tangent to the nation's production frontier
D)MRT of X for Y equals MRS of X for Y,and they are equal to Px/Py

Question

Quizplus · Accepted Answer

In equilibrium, a nation should consume on its production frontier, not inside it, as consuming inside the frontier implies underutilization of resources or inefficiency. Choices B, C, and D describe conditions of an efficient equilibrium where the nation is maximizing utility given its resources.

Which of the Following Is Not True for a Nation