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Exhibit: Guns and Butter

-(Exhibit: Guns and Butter) If the economy were producing 8 units of guns and 12 units of butter per period:
A) this is a possible choice, but would involve unemployment and/or inefficiency.
B) the notion of increasing opportunity cost is invalidated.
C) the economy is still efficient but has made a decision not to buy as much as it could.
D) something must be done to reduce the amount of employment.

Question

Use the following to answer question(s): 
Exhibit: Guns and Butter
 
-(Exhibit: Guns and Butter) If the economy were producing 8 units of guns and 12 units of butter per period:
A) this is a possible choice, but would involve unemployment and/or inefficiency. 
B) the notion of increasing opportunity cost is invalidated. 
C) the economy is still efficient but has made a decision not to buy as much as it could. 
D) something must be done to reduce the amount of employment.

Quizplus · Accepted Answer

This combination of output lies inside the production possibilities frontier and indicates unemployment and/or inefficiency.

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