Question

Consider a diagram in which the x-axis represents environmental quality and the y-axis represents the amount of goods produced. Currently, an economy is at Point A on the diagram. This Point A also lies on the economy's current PPF. Obviously, the economy's current indifference curve passess through Point A. If the current indifference curve also passes through a different point on the current PPF (call it Point B), then [ Note that both points , A and B, are on PPF and IC at the same time.]

the economy can be better off if it moves to point B.

the economy can't be made better off unless its PPF shifts.

the economy can't be better off by moving to a different point.

the economy can be better off by moving to a different point.

Answer 1

ANS

Option B. The economy can't be made better off unless its PPF shifts, This is true as the PPC shows the set of combination of possibilities of production of two goods. So an economy can be better off if the PPC shifts rightward as when a PPC shifts then it produces more goods and uses more resources in the economy. A movement in PPC cannot create a better economy as the level of resources utilized remains same at all the points in the PPC. This is the reason as to why option A,C and D are wrong.