Figure 2-4
Which of the following is true of Figure 2-4?
A) If the economy operates at point A , it is impossible to produce more of both food and clothing.
B) If the economy operates at point B , it is impossible to increase the output of clothing without giving up food production.
C) If the economy operates at point A , resources are being used efficiently.
D) If the economy operates at point B , resources are being used inefficiently.

Question

Figure 2-4 
Which of the following is true of Figure 2-4?
A) If the economy operates at point A , it is impossible to produce more of both food and clothing. 
B) If the economy operates at point B , it is impossible to increase the output of clothing without giving up food production. 
C) If the economy operates at point A , resources are being used efficiently. 
D) If the economy operates at point B , resources are being used inefficiently.

Quizplus · Accepted Answer

Point B represents a situation where the economy is producing at its maximum potential for food but is not producing as much clothing as it could. This means that in order to produce more clothing, the economy would have to give up some food production. Therefore, point B represents a situation of opportunity cost and trade-offs, where the economy has to make a choice between producing more food or clothing. Point A, on the other hand, represents a situation where the economy is not fully utilizing its resources and could produce more of both food and clothing. Therefore, choice A is incorrect. Choice C is also incorrect because point A represents a situation of underutilization of resources, not efficient use. Similarly, choice D is incorrect because point B represents a situation of trade-offs and opportunity cost, not inefficiency.

Figure 2-4 Which of the Following Is True of Figure 2-4