ECONOMICS
SCARCITY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A. Its resources are fully employed.
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B It is allocatively efficient.
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C It cannot trade with other nations because it is the most efficient producer of tradeable goods.
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D It will necessarily operate on the same frontier the following year.
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E It must be a command economy.
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Detailed explanation-1: -1. What is always true of an economy operating on its production possibilities frontier? Resources are fully employed when an economy is operating on its production possibilities frontier.
Detailed explanation-2: -Which of the following is always true of an economy operating on its production possibilities frontier? Its resources are fully employed.
Detailed explanation-3: -The correct answer is c) An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
Detailed explanation-4: -Which of the following is true of a production possibilities curve? It reveals the maximum amount of any two goods that can be produced from a fixed quantity of resources.