Microeconomics: Current Production Possibilities Curve Choice

[davie08]

Microeconomics help!(3-5)

Homework Statement

Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Other things being equal, society's current choice of point P on curve (a) will:
Answer


a)allow it to achieve more rapid economic growth than would the choice of point N.


b)entail a slower rate of economic growth than would the choice of point N.


c)entail the same rate of growth as would the choice of point N.


d)be unobtainable because it exceeds the productive capacity of the economy.

Homework Equations

The Attempt at a Solution

I went with b on this one just because I though I learned that when its the lower point it will entail a slower rate of growth but really I have no idea.

 

[nate808]

Hello! I can provide some insight on this question. The correct answer is actually a) allow it to achieve more rapid economic growth than would the choice of point N.

This is because point P is on the production possibilities curve, meaning that it represents the most efficient use of resources for the current economy. Choosing point N, which is inside the curve, would mean that the economy is not using all of its resources efficiently and therefore would result in a slower rate of economic growth. Point P, on the other hand, represents the maximum output that the economy can produce at the current time, so choosing this point would allow for more rapid economic growth.

I hope this helps! Let me know if you have any other questions.