Question

When a nation is in autarky and maximizes its living standard, its consumption and production points are a. beneath the production possibilities frontier. b. above the production possibilities frontier. c. along the production possibilities frontier. d. beside the production possibilities frontier.

Answer 1

Answer:

C) along the production possibilities frontier.

Explanation:

The production possibilities frontier refers to the maximum possible output of goods and services that an economy can produce by using all their available resources efficiently. Generally macroeconomics studies the production possibilities frontier of two goods or services, since it would be impossible to study all the different goods and services.

For example, if a country is able to produce 100 units of X and 50 units of Y, then the production possibilities frontier curve will include all the different possible output combinations of X and Y.

In their is no foreign trade, when a country maximizes its living standard, it means that it is actually producing along it production possibilities frontier.