An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. This economy can produce more cookies if:

Question

Quizplus · Accepted Answer

If the economy produces less ice cream, it frees up some resources that can be used to produce more cookies. This results in an increase in the production of cookies without any decrease in the production of ice cream. Therefore, option D is the best choice. Option A is incorrect because increasing the price of ice cream may reduce the demand for ice cream, which may result in a decrease in the production of both ice cream and cookies. Option B is incorrect because increasing the price of cookies may not necessarily lead to an increase in their production. Instead, it may reduce the demand for cookies, which may result in a decrease in their production. Option C is incorrect because idle resources mean a decrease in the production of both goods, which is opposite to the desired outcome.

An Economy Is Producing Two Goods, Ice Cream and Cookies