A point inside a production possibilities frontier (PPF)?
a.) Could indicate that resources are misallocated.
b.) Is more efficient than a point on the production possibilities frontier.
c.) Reflects the fact that more technology needs to be developed to fully employ all resources.
d.) Implies that too much labor and not enough capital is being used.
Answer:
A
A-- likely means that there are too few laborers to effectively use the available capital, thus an increase in laborers would push the point out to the production possibilities frontier
a. is the answer, because a point inside the PPF means the firm is producing at an inefficient point.
this means b is definitely not the answer, and as far as c and d go, you really don't know if you need more capital or more labor to reach the PPF (although in actuality it's probably both)
this only leaves option a. hope this helps
The answer is a.) Could indicate that resources are misallocated. b. is wrong because this would be a point outside the production possibilities frontier. It represents something to be achieved in the future when more technology or labor are available. c. is something outside the PPF. d. is a point either on the far left or far right on the curve.
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