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Which point(s) are inefficient? Briefly explain why. A. Points \( \mathrm{W}, \mathrm{X}, \mathrm{Y} \), and V because they are unattainable. B. Points \( \mathrm{Z}, \mathrm{W}, \mathrm{X} \), and Y because they are attainable. C. Point V because it is unattainable. D. Point Z because production there is not using all available resources. E. Points \( \mathrm{W}, \mathrm{X} \), and Y because they are on the production possibilities frontier.

Ask by Coleman Clarke. in the United States
Feb 03,2025

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Point Z is inefficient because it doesn't use all available resources effectively.

Solution

The correct answer is: **D. Point Z because production there is not using all available resources.** **Explanation:** - **Inefficient Points:** In the context of a Production Possibilities Frontier (PPF), points that lie **inside** the frontier represent inefficient use of resources because not all available resources are being utilized. - **Point Z:** According to option D, Point Z is producing at a level where not all resources are fully employed. This means that the economy could produce more of one or both goods without sacrificing the production of the other, indicating inefficiency. - **Other Options:** - **A & C:** Points that are unattainable (like V) are simply not feasible with the current resources and technology, but they are not considered inefficient because inefficiency pertains to achievable (attainable) points. - **B:** While some points might be attainable, not all attainable points are inefficient. Only those inside the PPF are inefficient. - **E:** Points on the PPF are efficient as they represent the maximum possible production levels with available resources. Therefore, **Point Z** is the inefficient point because it does not utilize all available resources effectively. **Answer:** **D. Point Z because production there is not using all available resources.**

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In this scenario, points \( \mathrm{W}, \mathrm{X}, \mathrm{Y} \), and V are indeed unattainable, making them inefficient because resources cannot be allocated to produce at these levels given current constraints. An unattainable point suggests that an economy does not have enough resources or technology to reach that production level. Conversely, point Z is considered inefficient because it reflects underutilization of resources. When production is not maximizing the potential output, that means some resources are either idle or not being used effectively, indicating a loss of potential economic efficiency.

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