Question 12
Basic ConceptsProduction possibility curve of country Y. If the economy of the country is operating at X, the implication is that
- A.the productive capacity is being fully utilized
- B.the productive capacity is not being fully utilized
- C.too little of consumer goods is being produced
- D.there is a disequilibrium between the production of capital and consumer goods
Show the answer and explanation
Answer: B (the productive capacity is not being fully utilized)
Explanation
X lies inside the curve, so the economy could produce more of both goods: some resources are idle or wasted.