Question

A point inside the PPC means that A. resources are not being fully utilized due to unemployment or inefficiency. B. one good has no opportunity cost relative to another. C. economic growth has taken place. D. this particular economy has no comparative advantage in production any economic good.

Answer 1

Answer:

A. resources are not being fully utilised due to unemployment or inefficiency.

Explanation:

PPC is graphical representation of product combinations that an economy can produce, given resources & technology.

PPC is based on assumption that resources are fully utilised. So, any point on PPC reflect product combinations utlising resources & technology fully efficiently.

Any point below PPC shows that given resources, technology are not fully efficiently utilised.

B. is inapt because each product has opportunity cost in terms of other good sacrifised. This inverse relationship between goods (one good increase, other good decrease & vice versa) make PPC downward sloping.

C. is also inapt because economic growth means growth in resources, technology. This will shift the PPC curve outwards & make the earlier unattainable points (beyond PPC), now attainable.

D. is unrelated