Given below is a production possibility schedule showing different quantities of two commodities – Cars and Computers which can be produced in an economy.
|
| Cars | Computers |
| A. | 150 | 10 |
| B. | 140 | 20 |
| C. | 120 | 30 |
| D. | 90 | 40 |
Which of the following combinations can the economy produce, but only when some of its resources are underemployed or used in a wasteful way?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 120 cars and 20 computers
With 20 computers, the economy can make at most 140 cars (point B). 120 cars with 20 computers is less than that, so it lies strictly below the frontier. Such a point is produced only when some resources are underemployed or wasted.
Option (1) 150 cars and 10 computers — Incorrect. 150 cars and 10 computers is point A, on the frontier, with all resources in use.
Option (2) 120 cars and 20 computers — Correct. It is below the most that can be made with 20 computers.
Option (3) 100 cars and 40 computers — Incorrect. With 40 computers the most is 90 cars, so 100 cars cannot be produced.
Option (4) 140 cars and 20 computers — Incorrect. 140 cars and 20 computers is point B, on the frontier.
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.” |