Keep the Highest: ors 1. Efficiency in the production possibilities model Suppos

Question

Keep the Highest: ors 1. Efficiency in the production possibilities model Suppose Ireland produces oots and laptops. The following graph shows Treland's current production poss frontier (PPF) and six output combinations (black X symbols) labeled A to F bilities LAPTOPS [Mälions per yearl PPF 20 B0 100 OATS IMillians ef tons per yearl inefficient? Which points on the graph represent output combinations that are Which points on the graph represent output combinations that are efficient in production? Which points on the graph represent output combinations that are unattainable? QNA 3.16 © 2004-2016 Apla AbrOts reserved ViewSonic

Explanation / Answer

Production possibilities curve explains optimum utilization of the scarce economic resources in the economy following is the main assumptions of the theory.

1) Point XA and XB are inefficient productions because resources are underutilized still there is opportunity to use the resources

2) Point XF is efficient production because resource is fully utilized

3) Point XC and XD are not attainable because resource is already fully employed further increasing resources not possible

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