Use the following to answer questions:
-(Figure: Guns and Butter)Use Figure: Guns and Butter.Suppose the economy produced 8 guns and 12 kilograms of butter per period.Given that,which statement is TRUE?
A) This is a possible choice,but it is inefficient.
B) This combination invalidates the notion of increasing opportunity cost.
C) The economy is still efficient but does not buy as much as it could.
D) Something must be done to reduce the amount of employment.

Question

Use the following to answer questions: 
-(Figure: Guns and Butter)Use Figure: Guns and Butter.Suppose the economy produced 8 guns and 12 kilograms of butter per period.Given that,which statement is TRUE?
A) This is a possible choice,but it is inefficient. 
B) This combination invalidates the notion of increasing opportunity cost. 
C) The economy is still efficient but does not buy as much as it could. 
D) Something must be done to reduce the amount of employment.

Quizplus · Accepted Answer

This combination of output is inside the production possibilities frontier, so it is possible, but it is not efficient as it is not using all available resources to produce more of either good.

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