A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by
A) the midpoint of the production possibilities frontier.
B) a point inside the production possibilities frontier.
C) any point on either the horizontal or the vertical axis.
D) a point outside the production possibilities frontier.

Question

Quizplus · Accepted Answer

A point inside the production possibilities frontier represents a situation in which some resources are not fully utilized. This is because the economy is producing less than it is capable of producing given its available resources and technology. The points on the frontier represent the maximum output that the economy can produce with its resources and technology. The midpoint of the frontier represents a situation in which the resources are being used equally for the production of two goods, but this does not necessarily mean that all resources are fully utilized. Points outside the frontier are unattainable given the current resources and technology. Points on the axes represent a situation in which one good is being produced at its maximum potential while the other good is not being produced at all.

A Situation in Which Some Resources Are NOT Fully Utilized