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True
B
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Understanding the Answer
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Answer
When a country is operating at full production capacity, it means all its resources are being used efficiently. If it decides to produce more consumer goods, it must take resources away from other areas, like capital goods or services. This shift creates an opportunity cost, which is the value of what is given up in order to produce the consumer goods. For example, if a country redirects steel from making cars to making refrigerators, the opportunity cost is the cars that are not produced. Thus, even at full capacity, there are always trade-offs and costs associated with choosing one option over another.
Detailed Explanation
When a country uses all its resources, choosing to make more consumer goods means giving up something else. Other options are incorrect because Some might think that using all resources means no costs.
Key Concepts
Opportunity Cost
Resource Allocation
Production Possibility Frontier
Topic
Opportunity Cost Analysis
Difficulty
hard level question
Cognitive Level
understand
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