Question

1. a company that makes baseball caps is under-utilizing its resources. what does this mean?

the company is running more efficiently than its competitors.
the company is paying its employees less than it should be.
the company is making caps when it could be making t-shirts instead.
the company is producing fewer caps than it could be.

1. match each graph with its description.

a.
soda
orange juice

inefficient production
productive efficiency
an inefficient mix of output

Explanation:

Analyze underutilization of resources

Underutilization means a firm is not using all its available resources to their full potential. In the context of production, this means the company is producing at a level below its maximum capacity. Therefore, the company is producing fewer caps than it could be.

Analyze point A on the PPC

Point A lies directly on the Production Possibilities Curve (PPC). Any point located on the curve represents a combination of goods produced using all resources fully and efficiently. This state is known as productive efficiency.

Answer:

Question 13

• The company is running more efficiently than its competitors.
• The company is paying its employees less than it should be.
• The company is making caps when it could be making T-shirts instead.
• The company is producing fewer caps than it could be. (Correct answer)

Question 14

• Inefficient production
• Productive efficiency (Correct answer)
• An inefficient mix of output