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Question

If the economy is producing a combination of goods inside its production possibilities frontier then __________.


A
resources are being optimally used
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B
there is fall in demand of the goods being produced
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C
there is qualitative improvement in technology
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D
some of the resources are lying idle
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Solution

The correct option is D some of the resources are lying idle

If the economy is producing a combination of goods inside its production possibilities frontier then some of the resources are lying idle. The points that lie inside the PPC means that the actual production is falling short of its capabilities and there is a wastage or inefficient utilization of resources. Hence, the firm should aim to operate at any point on the PPF and not inside it. 


Economics

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