Answered: Suppose the United States produces only…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the United States produces only two goods: alfalfa and computers. The following graph shows the United States’s current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F.

Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, attainable, or unattainable. Check all that apply.

(refer to screenshot for table and graph)

100
メミ
80
PPF
60
36, 46
B
20
20
40
60
80
100
ALFALFA (Millions of bushels)
Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, attainable, or
unattainable. Check all that apply.
Point
Inefficient
Efficient
Attainable
Unattainable
A
D
E
F
O O O OO O
O O O O O
O O O O
O O O O O O
COMPUTERS (Millions)

Expert Solution

Step 1

Production possibility curve can be explained as the curve which shows different possibilities of the combinations of two goods which can be produced within the available resources in the economy. The point on the curve are the points which are attainable and efficient, whereas the point inside the curve are considered to be attainable but inefficient. Moreover, the points above the PPC are said to be unattainable point because of the limited resources available in the economy.

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