A small Caribbean island-country produces only pineapples and rum.If resources are used efficiently in the economy,
A)it will not be possible to produce more rum without decreasing the production of pineapples.
B)it will be possible to produce more pineapples without decreasing the production of rum.
C)it will be producing on its production possibilities curve.
D)it will not be possible to produce more rum without decreasing the production of pineapples AND it will be producing on its production possibilities curve.
E)it will be possible to produce more pineapples without decreasing the production of rum AND it will be producing on its production possibilities curve.

Question

Quizplus · Accepted Answer

When resources are used efficiently in an economy, it means the economy is operating on its production possibilities curve (PPC). At any point on the PPC, to produce more of one good (e.g., rum), the production of the other good (e.g., pineapples) must decrease, due to the limited resources. This is known as the principle of opportunity cost.

A Small Caribbean Island-Country Produces Only Pineapples and Rum