Question

President of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid:_______.
a) if the United States is producing at a point on its production possibilities frontier.b) if the United States is producing at a point inside its production possibilities frontier.c) only if the production possibilities frontier shifts rightward.d) if the United States is producing at a point beyond its production possibilities frontier.

Answer 1

Answer:

The correct answer is option b.

Explanation:

A production possibilities frontier shows the maximum possible bundles of two goods that an economy can produce using its given resources and level of technology.  

Because of the scarcity of resources, the production of a good can be increased only by decreasing the production of the other good.  

It is possible to increase the production of a good without reducing the production of the other only if the economy is producing at a point below the production possibilities curve.