Question

4 graph the following data and answer the question:

a) points a through g represent a(n) _ use of resources.
b) what does it mean to for an economy to use resources efficiently?

c) movement from c to e cost the economy _ units of popcorn.
d) what term(s) could be used to describe the ppf if it were producing at the (10, 10) range?

e) illustrate a currently unattainable point by labeling an \x\ on the ppf diagram.

Explanation:

• a) Points on the PPF (Production - Possibility Frontier) represent an efficient use of resources. When an economy is on the PPF, it is using all its resources (land, labor, capital) without any waste.
• b) Using resources efficiently means that an economy is producing the maximum amount of goods and services possible with its given resources and technology. There is no way to produce more of one good without producing less of another good.
• c) At point \(C\), the amount of popcorn is \(21\) units. At point \(E\), the amount of popcorn is \(14\) units. The cost (opportunity cost) of moving from \(C\) to \(E\) is \(21 - 14=7\) units of popcorn.
• d) If an economy is producing at a point inside the PPF (such as \((10,10)\) if it is inside), it is said to have unemployed resources. There are resources (e.g., labor, capital) that are not being used to their full capacity.
• e) A currently unattainable point is a point outside the PPF. For example, if we assume the PPF is the curve drawn in the graph, a point \((25,25)\) (if the axes go up to at least \(25\)) would be outside the PPF.

Answer:

a) efficient
b) Producing the maximum amount of goods and services with given resources and technology; no waste of resources.
c) \(7\)
d) unemployed resources
e) (On the graph, mark a point outside the PPF curve as \(X\))