Is it possible in the present to produce at a point that is outside the production possibilities frontier? Why or why not? With the passage of time how might a point outside the present production possibilities frontier be possible?
What will be an ideal response?
In the present, points outside the production possibilities frontier are not possible because the frontier represents the current inputs and technology that are available to the economy. With the passage of time this points will become attainable when and if there is a positive change in technology and/or a discovery of new resources.
You might also like to view...
Which of the following explains why the Fed is able to have a dramatic effect on aggregate demand and real output in the short run?
A. price confusion that speeds up the adjustment of real GDP B. money illusion that speeds up the adjustment of the price level C. sticky prices that slow the adjustment of the price level D. sticky wages that slow the adjustment of real GDP
Rent controls can cause distortions in resource allocation by
a. causing too many resources to be devoted to housing b. creating a surplus of housing c. creating incentives toward home ownership rather than renting d. causing too few resources to be devoted to housing e. decreasing the demand for rental units