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.
Compared with last year, what can Rampur do this year?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Produce more wheat and more sugarcane together, without giving up either crop
This year the idle land and workers are back at work, with the same resources and methods. Rampur moves from a point below its frontier up to the frontier. It can grow more of both crops without giving up either. The frontier itself does not move.
Option (1) Produce more wheat than last year only if it grows less sugarcane than last year — Incorrect. This holds only for an economy already on its frontier. Last year Rampur was below it.
Option (2) Produce more of both crops, because its production possibility frontier has shifted outwards — Incorrect. Land, workers and methods are the same, so the frontier has not shifted.
Option (3) Produce more wheat and more sugarcane together, without giving up either crop — Correct. Putting idle resources to work raises the output of both crops.
Option (4) Produce no more than last year, as its resources are fixed — Incorrect. Last year some resources were idle. Using them now raises output.
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.” “… Given the total amount of resources, it is possible to allocate the resources in many different ways and, thereby achieving different mixes of all possible goods and services. The collection of all possible combinations of the goods and services that can be produced from a given amount of resources and a given stock of technological knowledge is called the production possibility set of the economy.” |