Suppose That an Economy Is Currently Producing at a Point

question 50

Multiple Choice

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set. Which of the following would best explain this circumstance?

• A) The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set.
• B) The economy is experiencing a high level of unemployment.
• C) The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set.
• D) Any of the above statements could explain this situation.
• E) None of the above statements could explain this situation.

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