Question

If at some other point say K, the economy produces $3,000$ Cellphones and $32,000$ quintals of Rice, it would __________.

Situation	Cellphones(units)	Rice(quintals)
A	$0$	$60,000$
B	$1000$	$55,000$
C	$2000$	$48,000$
D	$3000$	$38,000$
E	$4000$	$23,000$
F	$5000$	$0$

• A. represent under-utilization of resources
• B. would lie below the PPC
• C. both (a) and (b)
• D. neither (a) nor (b)

Answer 1

Answer: (C)

both (a) and (b)

When the economy produces 3,000 units of cellphones, it has the required resources to produce 38,000 quintals of rice. So if the economy produces less quintals of rice with the same production of cellphones, then the economy is not utilizing the resources efficiently which indicates that the production point will lie inside the production possibility curve.