A nation achieves autarky equilibrium at the point where its community indifference curve is tangent to its production possibilities schedule.

Question

Quizplus · Accepted Answer

Autarky equilibrium occurs when a country produces and consumes everything it needs without importing or exporting anything. At this point, the country's community indifference curve (representing the people's satisfaction with consumption) is tangent to the production possibilities schedule (representing the country's capacity to produce goods and services). This is because any point beyond the tangent point would mean the country is producing more than it needs and sacrificing its people's satisfaction, while any point before the tangent point would mean the country is not producing enough to meet the people's needs.

A Nation Achieves Autarky Equilibrium at the Point Where Its