Question

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. if an economy operates at a point inside its production possibilities curve,

Answer 1

It is not an inefficient economy.

If an economy operates at a point inside its production possibility curve, this means that the maximum quantities of the two products produced are not allocating resources in the economy efficiently. This inefficiency needs to be corrected through alternate action and allocations in order to arrive at a point on the production possibilities curve for increased efficiency.