The figure given below shows the production possibilities frontier for mufflers and socks.If society moves from point c to point d,then society:

A)gains 100 socks.
B)loses 30 mufflers.
C)is worse off after the change in production.
D)is not operating efficiently.
E)experiences some unemployment of resources.

Question

The figure given below shows the production possibilities frontier for mufflers and socks.If society moves from point c to point d,then society:

A)gains 100 socks. 
B)loses 30 mufflers. 
C)is worse off after the change in production. 
D)is not operating efficiently. 
E)experiences some unemployment of resources.

Quizplus · Accepted Answer

Moving from point c to point d involves shifting resources from producing mufflers to producing socks. As a result, society gains 80 socks (moving from 120 to 200) but loses 30 mufflers (moving from 150 to 120). Therefore, the correct option is B, which states that society loses 30 mufflers. Option A is incorrect because society gains 80 socks, not 100. Option C is incorrect because society gains more of one good (socks) while losing some of the other good (mufflers), so it is not worse off. Option D is incorrect because the society is still operating on the production possibility frontier, it is just shifting resources from one good to the other. Option E is also incorrect because there is no mention of unemployment in the question.

The Figure Given Below Shows the Production Possibilities Frontier for Mufflers