GCEEconomicsBasic Economic Concepts2020

An economy produces only two goods: rice and textiles. Currently it operates at a point inside its production possibility curve. This situation indicates that the economy

Ahas fully employed all its productive resources
Bis experiencing productive inefficiency due to underutilised resourcesCORRECT
Chas exceeded its productive capacity
Dmust reduce the production of rice to increase textile output
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Toaster Teacher
Why the answer is B, and why the others tempt you.
A point inside the PPC represents productive inefficiency, meaning the economy is not using all its available resources — some are idle or underemployed (e.g., unemployed labour or idle capital). A point on the PPC represents full productive efficiency. A point beyond the PPC is currently unattainable. The trade-off described in option D only applies when operating on the PPC, not inside it.
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