Question

In the given figure, the movement on the production possibility curve from Point A to Point B shows 

• A. Growth of all the resources in the economy
• B. Underutilisation of resources
• C. Production of more units of good x and less units of good y
• D. Production of more units of good y and less units of good x

Hint:

The production possibility curve demonstrates the trade-offs between different goods, highlighting the opportunity costs of increasing production in one area.

Answer 1

The Correct Option is C

Step 1: Understanding the Production Possibility Curve:
The production possibility curve (PPC) represents the maximum combination of two goods that can be produced given the resources and technology available. Movement along the curve reflects the trade-offs between producing different combinations of goods.
Step 2: Interpreting the Figure:
- The movement from Point A to Point B on the curve implies that the production of more units of good x is achieved by sacrificing the production of good y. This is a typical illustration of opportunity cost and trade-offs on the production possibility curve. - This shows that to produce more of good x, resources are diverted from the production of good y, leading to a decrease in the quantity of good y.
Step 3: Conclusion:
The correct answer is option (C), which represents the trade-off of producing more units of good x at the cost of good y.