Question

According to the production possibilities curve above, if the economy is producing 75 fishing boats and 400 jars of guava jelly, then:
a. the economy is not using resources efficiently.
b. the economy is using resources efficiently.
c. the economy is operating at point G.
d. there is unemployment of resources in the fishing boat industry.
e. there is unemployment of resources in the guava jelly industry.

Answer 1

Answer: the economy is using resources efficiently

Explanation:

The Production Possibility Curve simply shows how two goods can be produced in an economy when the resources that are used to produce the goods are being used efficiently without wasting them.

According to the production possibilities curve above, if the economy is producing 75 fishing boats and 400 jars of guava jelly, then the economy is using resources efficiently.

Here, economic efficiency simply means that the resources that are utilized are optimally allocated while inefficiency and wastage are being minimized. Foe economic efficiency to take place, there'll be opportunity cost. This is shown in the graph as more fishing boats are produced, less jars of guava jelly are made and vice versa.