Which of the following is the most accurate statement about production possibilities?
A. An economy can produce only on the production possibilities frontier.
B. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.
C. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
D. An economy can produce at any point inside or outside a production possibilities frontier.

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DelcieRiveria DelcieRiveria · Answer 1 · 2019-09-12T10:53:26+02:00

Answer:

The correct answer is option C.

Explanation:

A production possibility frontier shows the maximum possible combination of two goods that can be produced using the given resources.

The points below the frontier show those bundles which are attainable but not efficient as all the resources are not being employed.

The points on the frontier show the bundles that are efficient and attainable.

The points above the frontier are unattainable as they need more resources to be produced.

So, an economy can produce at a point on the frontier or below it, but the efficient points are on the frontier.