The table shows the combinations of Good X and Good Y that an economy can produce when its resources are fully utilised:
| Good X (units) | 0 | 1 | 2 | 3 | 4 |
| Good Y (units) | 30 | 28 | 24 | 16 | 0 |
The economy now produces 2 units of X and 18 units of Y. It puts all its idle resources to work and also decides to produce 3 units of X. What is the largest amount of Y it can now produce?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 16 units
Given:
Now: 2 units of X and 18 units of Y
Target: 3 units of X, with all idle resources put to work
The frontier gives the most Y for each amount of X when resources are fully used.
Most Y at 2 units of X = 24 units. The economy makes only 18, so it is below the frontier and has idle resources.
With all resources in use and 3 units of X, the economy reaches the frontier.
Most Y at 3 units of X = 16 units
Option (1) 10 units — Incorrect. This takes the cost of the third unit (24 − 16 = 8) away from 18. It forgets the idle resources that are now put to work.
Option (2) 8 units — Incorrect. This is the Y given up for the third unit of X on the frontier, not the Y produced.
Option (3) 24 units — Incorrect. This is the most Y at 2 units of X, not 3.
NCERT (2026-27): “Production Possibility Frontier … Any point on or below the curve represents a combination of corn and cotton that can be produced with the economy’s resources. The curve gives the maximum amount of corn that can be produced in the economy for any given amount of cotton and vice-versa. This curve is called the 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.” |