Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The economy can produce more of one good without sacrificing the production of another good.
B
The economy is producing at maximum efficiency and any increase in one good's production requires a decrease in the production of another good.
C
The economy is not utilizing all its resources, thus allowing for increased production of both goods without any opportunity cost.
D
The opportunity cost of producing one good is zero when producing at any point on the PPC.
Understanding the Answer
Let's break down why this is correct
Answer
When an economy is operating on its Production Possibility Curve (PPC), it means that it is using all its resources efficiently to produce goods and services. This situation shows that the economy is at maximum output, and any attempt to produce more of one good will require sacrificing some amount of another good. This sacrifice is known as opportunity cost, which is the value of the next best alternative that is given up. For example, if a country produces more cars, it might have to reduce the production of trucks, showing that resources are being reallocated. Therefore, operating on the PPC indicates not just efficiency but also highlights the trade-offs involved in economic decisions.
Detailed Explanation
When an economy is on the PPC, it uses all its resources well. Other options are incorrect because This idea suggests that more of one good can be made without losing any of another; This option implies that not all resources are being used.
Key Concepts
Production Possibility Curve (PPC)
Economic efficiency
Choice
Topic
Opportunity Cost and PPC
Difficulty
hard level question
Cognitive Level
understand
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