A point on a production possibilities curve indicates
A) resources are not being used efficiently.
B) resources are being used efficiently.
C) opportunity costs are constant.
D) an output combination that can be attained only if society gets more resources or there is technological change.

Question

Quizplus · Accepted Answer

A point on a production possibilities curve represents an efficient use of resources, where all resources are being fully utilized to produce a combination of goods and services. Any point inside the curve represents an inefficient use of resources, while any point beyond the curve is unattainable with the given resources and technology. The curve assumes constant opportunity costs, meaning that to produce more of one good, some amount of the other good(s) must be given up. Therefore, choice B is the correct answer. Choice D is also true, but it goes beyond the scope of the question.

A Point on a Production Possibilities Curve Indicates