Assuming that a society always operates on its production possibilities curve,an inward shift of the curve implies that
A)the country's capacity to produce is fixed.
B)the country is not using its resources efficiently.
C)the country's capacity to produce has contracted.
D)All of the choices are true.

Question

Quizplus · Accepted Answer

An inward shift of the production possibilities curve means a decrease in the country's capacity to produce goods and services. This could happen because of factors such as a natural disaster, a decrease in the availability of resources, or a decrease in the efficiency of production. Option A is incorrect as it assumes that the country's capacity to produce is fixed, which is not necessarily true. Option B is not necessarily true as the country might be producing at its optimal level but still experiencing an inward shift due to external factors. Option D is incorrect as it implies that all options are true, which is not the case.

Assuming That a Society Always Operates on Its Production Possibilities