1) What happens when production is inside the production possibilities curve?
1 answer:
When production is inside the production possibilities curve, it means that the production is not maximized because some resources are unused.
A production possibility curve shows how an economy can be able to produce two goods while making use of the resources that it has. It follows the principle of trade off because as the production of a particular good is increased, the other good has to be reduced.
Production on the production possibility curve shows that the economy is making efficient use of the resources that it has.
When the production is inside the production possibility curve, it means such economy isn't making efficient use of the resources that it has.
Therefore, the correct option is A.
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