If an economy that produces capital and consumer goods is operating at a point on its production possibilities curve:
A) it is achieving full employment but not full production.
B) it is achieving full production but not full employment.
C) more capital goods can be produced only at the cost of some consumer goods.
D) the economy is incapable of achieving significant economic growth.

Question

Quizplus · Accepted Answer

When an economy is operating on its production possibilities curve, it is using all available resources efficiently. Therefore, to produce more of one good (capital goods), it must reduce the production of another good (consumer goods), illustrating the concept of opportunity cost.

If an Economy That Produces Capital and Consumer Goods Is