Rampur is a small village economy that grows only two crops, wheat and sugarcane. It has a fixed amount of land, a fixed number of workers and the same farming methods as before. Last year, a dispute kept part of its land unused, and many of its workers had no work for months. This year, the dispute has been settled, and all its land and workers are in use.
Last year’s output of wheat and sugarcane in Rampur would be shown by a point:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → strictly below its production possibility frontier
Last year part of Rampur’s land lay unused and many workers had no work. When some resources are underemployed, output lies at a point strictly below the production possibility frontier.
Option (1) strictly below its production possibility frontier — Correct. Idle land and workers put output below the frontier.
Option (2) on its production possibility frontier — Incorrect. On the frontier, all resources are fully utilised.
Option (3) beyond its production possibility frontier — Incorrect. A point beyond the frontier cannot be produced with the village’s resources.
Option (4) on a new frontier that lies further away from the origin — Incorrect. A frontier further out needs more resources or better methods. Rampur’s land, workers and methods are the same.
NCERT (2026-27): “Production Possibility Frontier The production possibility frontier gives the combinations of corn and cotton that can be produced when the resources of the economy are fully utilised. Note that a point lying strictly below the production possibility frontier represents a combination of corn and cotton that will be produced when all or some of the resources are either underemployed or are utilised in a wasteful fashion.” |