Question

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point below that PPF. Assuming that the PPF has not shifted, this could be due to Question 14 options: a gain of resources. a loss of resources. technological improvement in the production of both goods. a new law that interferes with economic efficiency.

Answer 1

Answer:

The correct answer is: a new law that interferes with economic efficiency.

Explanation:

A production possibilities frontier shows all the points where production is efficient. The resources are being completely employed. The points above the frontier are unattainable. The points below the frontier are attainable but inefficient.

If there is a movement from the frontier to a point below it. This means inefficient allocation of resources. It can happen because of some law interfering in efficient allocation of resources.