On a production possibilities frontier (PPF)that shows the trade-off between consumer goods and capital goods given a fixed amount of labor,unemployment is illustrated by
A) movement from a point within the frontier to a point on the frontier.
B) a point outside the frontier.
C) a point within the frontier.
D) movement from a point on the frontier to another point on the frontier.
E) a point on the frontier.

Question

Quizplus · Accepted Answer

The PPF represents the maximum combination of goods that can be produced with the available resources. Any point on the frontier represents the efficient allocation of resources, and any point inside the frontier represents inefficient use of resources. Unemployment is illustrated by a point inside the PPF because the economy is producing below its potential. Movement from a point within the frontier to a point on the frontier represents a more efficient use of resources, but it does not represent unemployment. A point outside the frontier is not attainable with the given resources, and movement from a point on the frontier to another point on the frontier does not represent unemployment. Therefore, the best choice is C.

On a Production Possibilities Frontier (PPF)that Shows the Trade-Off Between