Please help me find the answer to the following. I got the answer wrong. **Understanding Economic Efficiency:**When an economy is producing efficiently, it means that resources are being used in the most effective manner possible, and it operates on its production possibilities frontier. Consider the following options to assess what efficiently producing means:- **Option A:** There is no way to produce more of one good without producing less of another good. *This option suggests that efficient production requires trade-offs.*- **Option B:** It is possible to produce more of both goods without increasing the quantities of inputs that are being used. *This describes a scenario where there is still inefficiency or underutilization.*- **Option C (selected):** It is possible to produce more of one good without producing less of another good. *This indicates misinterpretation; such a condition is an indicator of inefficiency.*- **Option D:** It is not possible to produce more of any good at any cost. *This would suggest an absolute boundary in production capabilities.*The correct implication of efficiency aligns with Option A, where increasing the production of one good results in reducing the production of another due to optimal utilization of resources.

Production possibility frontier (PPF) curve shows all possible combination of two goods that can be produced by using the same amount of resource. Economy is efficient if the economy is operating at PPF curve.The PPF cure is showing below. In the above diagram, horizontal axis measures good X and vertical axis measures price. The economy is in efficient level by producing output at the point A on PPF curve. At this point, the quantity of good X is QX and the quantity of good Y is QY. When the economy is increases the production of good Y from PY to PY1, then it leads to reduce the production of good X from OX to OX1. When the economy is operating efficiently, then it is impossible to increase the production of one good without reducing the production of other good. Thus, first option is correct. Both the goods can be produced if the production capacity of the country increases. Thus, second option is incorrect. It is possible, if the economy is operating at the point below the PPF curve. Thus, third option is incorrect. By moving from one point to another point on the PPF curve, firm, can increase the production of one good as a result of giving up other goods. Thus, fourth option is incorrect.

Business

Economics

If an economy is producing efficiently, then ) there is no way to produce more of one good without producing less of another good. O it is possible to produce more of both goods without increasing the quantities of inputs that are being used. it is possible to produce more of one good without producing less of another good. ) it is not possible to produce more of any good at any cost.

If an economy is producing efficiently, then ) there is no way to produce more of one good without producing less of another good. O it is possible to produce more of both goods without increasing the quantities of inputs that are being used. it is possible to produce more of one good without producing less of another good. ) it is not possible to produce more of any good at any cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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