When an economy's resources are not fully employed, then it must be true that the:

Question

Quizplus · Accepted Answer

The production point represents a level of production that can be achieved with the current resources and technology. If resources are not fully employed, it means that the economy is producing below its potential, and the production point is located inside and to the left of the production possibilities frontier. This indicates that there are unused resources in the economy, and that there is potential for higher levels of production. Option A is incorrect because a point outside and to the right of the production possibilities frontier implies that the economy is producing more than it's capable of, which is not the case when resources are not fully employed. Option B is incorrect because a point along the frontier represents maximum potential production, which is not the case when resources are not fully employed. Option D is incorrect because the production possibilities frontier represents the maximum potential production given the current resources and technology, and a shift in the frontier would require a change in these factors.

When an Economy's Resources Are Not Fully Employed, Then It