Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs.If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should
A)produce more hamburgers and fewer TVs.
B)produce more TVs and fewer hamburgers.
C)produce more of both goods.
D)produce fewer of both goods.

Question

Quizplus · Accepted Answer

If the economy is producing more than the optimal quantity of hamburgers, it means resources are not being allocated efficiently. To reach optimal allocation, the economy should produce fewer hamburgers and more TVs, balancing the production to meet the optimal point on the production possibility frontier.

Suppose That a Fully Employed Economy Produces Only Two Goods