A point outside the Production Possibility Curve represents:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A combination of goods can not be produced as it is beyond the capacity of the economy.
The production possibility curve (the production possibility frontier) shows the most an economy can produce with its resources. Any point on or below the curve can be produced, so a point outside it cannot.
Option (1) A combination of goods can be produced but resources are underutilized. — Incorrect. With some resources not fully used, the economy is at a point below the curve.
Option (2) A combination of goods can be produced, and the resources are fully utilized. — Incorrect. Combinations with resources fully used lie on the curve.
Option (3) A combination of goods can not be produced as it is beyond the capacity of the economy. — Correct. The curve gives the maximum output, so a point outside needs more than the economy’s resources can produce.
Option (4) A combination of goods can be produced and resources are appropriately utilized. — Incorrect. Resources used well means a point on the curve. A point outside the curve cannot be produced at all.
NCERT (2026-27): Introductory Microeconomics — Chapter 1: Introduction
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