Question

“An economy always produces on, but not inside, a PPC”. Define or refute?

Answer 1

In the economy with the given resources being fully employed and technology given, the combination of two goods will be any where on PPC. The society decides any combination like A,B on PPC. If there is inefficient use of resources or unemployment in any form in the economy, the economy will operate strictly within the PPC, for example, at point G.