A production point inside of the production possibilities frontier is.... 1. Ine

Question

A production point inside of the production possibilities frontier is....

1. Inefficient because there may not be enough technology to produce more.

2. Inefficient because there is an opportunity cost of not producing more when you are able to do so.

3. Efficient because no economy can always produce at it's maximum level.

4. Efficient because factors such as health and education may prevent you from attaining efficiency.

When two countries produce according to comparative advantage, it is the idea that

1. Each country will produce that good that they have the lowest opportunity cost of producing.

2. Each country will produce the good that it can produce more of than the other country.

3. Each country will produce that good which is most favored by its citizens.

4. Each country will trade until efficiency is obtained.

1. Inefficient because there may not be enough technology to produce more.

2. Inefficient because there is an opportunity cost of not producing more when you are able to do so.

3. Efficient because no economy can always produce at it's maximum level.

4. Efficient because factors such as health and education may prevent you from attaining efficiency.

Explanation / Answer

The correct answer is: b)

Reason: any point inside the PPF is an underutilisation of the resources available in an economy.

2. The correct answer is: 1

Reason: country with the lowest opportunity cost of producing a certain good has a comparativel advantage in that good and thus should specialise and produce more of that good only.

Thanks!

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