Why is a point below the production possibilities curve less efficient than a point on that curve?
What will be an ideal response?
A point on the production possibilities curve is efficient because it means the economy is producing the maximum outputs of goods and services with given resources and technology. By contrast, a point below the production possibility curve means that the use of the given resources is not generating the maximum possible outputs of goods and services. Thus, this point represents an inefficient combination of outputs produced with available resources and technology.
You might also like to view...
Refer to Figure 2-4. Consider the following events:
a. an increase in the patent protection period to 75 years b. a hurricane that destroys a substantial portion of a nation's capital stock c. the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z? A) a only B) a and b only C) a and c only D) b and c only E) a, b, and c
Professor Gordon posits that the best years of U.S. growth are behind us because of four "headwinds," which are:
a. lackluster growth and poverty b. demographids and education c. debt and inequality d. a and b only e. b and c only