According to the Production Possibilities Frontier (PPF), where can an economy not produce?

• A. At points on the PPF
• B. At points inside the PPF
• C. At points outside the PPF
• D. At the origin

Answer: (C)

Verified step by step guidance

1. Understand that the Production Possibilities Frontier (PPF) represents the maximum possible output combinations of two goods that an economy can produce given its resources and technology.
2. Recognize that points on the PPF curve indicate efficient production levels where all resources are fully utilized.
3. Know that points inside the PPF represent inefficient production, where some resources are underutilized or wasted.
4. Identify that points outside the PPF are unattainable with the current resources and technology, meaning the economy cannot produce at these points.
5. Conclude that the economy cannot produce at points outside the PPF because they lie beyond the maximum production capacity.