Question

At full employment, a society produces:
a) somewhere within its production possibilities frontier (PPF)
b) at the origin on its PPF graph
c) somewhere outside its PPF
d) on its PPF
e) only one good

Answer 1

Answer- The correct option is D ie., on it’s PPF. A production possibility frontier shows the combination of two goods that can be produced with given or stated level of inputs available and technology. When there is full level of employment prevailing in the economy then the society will be producing at point on it’s PPF as it will be utilising all of it’s resources to the macimum capacity. Any point on the PPF represents full level of employment and optimum utilisation of resources and a point below the PPF represents under utilisation of resources and a point outside the PPF represents that more resources and technology will be needed to reach to the point outside PPF.