-Refer to the above figure. Which one of the following statements is TRUE with regard to the economy depicted in the graph?
A) Point C cannot be produced.
B) The best production point is 500 loaves of bread and 50 bales of wool.
C) The total amount of resources it takes to produce 20 bales of wool and 500 loaves of bread is more than the amount of resources needed to produce 50 bales of wool and 250 loaves of bread.
D) The total amount of resources it takes to produce 20 bales of wool and 500 loaves of bread is the same as the amount of resources needed to produce 50 bales of wool and 250 loaves of bread.

Question

-Refer to the above figure. Which one of the following statements is TRUE with regard to the economy depicted in the graph?
A) Point C cannot be produced. 
B) The best production point is 500 loaves of bread and 50 bales of wool. 
C) The total amount of resources it takes to produce 20 bales of wool and 500 loaves of bread is more than the amount of resources needed to produce 50 bales of wool and 250 loaves of bread. 
D) The total amount of resources it takes to produce 20 bales of wool and 500 loaves of bread is the same as the amount of resources needed to produce 50 bales of wool and 250 loaves of bread.

Quizplus · Accepted Answer

Given the information, it's assumed that the economy operates on a production possibility frontier (PPF), which represents the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized. Points along the PPF (like producing 20 bales of wool and 500 loaves of bread or 50 bales of wool and 250 loaves of bread) require the same total amount of resources, as they both lie on the curve. This means the economy is efficiently using its resources to produce different combinations of the two goods.

-Refer to the Above Figure