Question

Suppose that a country has the resources to produce 3 million cars & 100 million tons of iron ore every year. why is it a problem if the country produces 2 million cars and 75 million tons of iron ore one year?

Answer 1

If a country has the capacity to produce 3 million cars and 100 million tons of ion ore, but is only able to produce 2 million cars and 75 million tones of ire one, the country is underutilizing it's natural resources and productivity.

In business terms, the country has the capacity to produce over 1 million more cars and 25 million tones of more iron ore. The country is losing out on billions of dollars of revenue.