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Exhibit: Sugar and Freight Trains

-(Exhibit: Sugar and Freight Trains) Suppose the economy is producing 180 tons of sugar and 2 freight trains. This implies that:
A) the economy is operating at full employment.
B) the economy is operating efficiently.
C) the economy is not producing as much as it could.
D) economic growth would help the economy move to its production possibilities curve.

Question

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Exhibit: Sugar and Freight Trains
 
-(Exhibit: Sugar and Freight Trains) Suppose the economy is producing 180 tons of sugar and 2 freight trains. This implies that:
A) the economy is operating at full employment. 
B) the economy is operating efficiently. 
C) the economy is not producing as much as it could. 
D) economic growth would help the economy move to its production possibilities curve.

Quizplus · Accepted Answer

This exhibit shows a production possibilities curve, which represents the maximum combination of two goods that an economy can produce given its resources and technology. If the economy is producing 180 tons of sugar and 2 freight trains, it is operating below its production possibilities curve, which means it is not producing as much as it could. Therefore, choice C is the correct answer. Choices A, B, and D are incorrect, as they do not accurately reflect the situation described in the exhibit.

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