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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

The economy is producing 100X and 200Y, but it could produce 200X and 300Y with the given resources and technology. Does it follow that when the economy is producing 100X and 200Y that it is productive inefficient and that when it is producing 200X and 300Y it is productive efficient? Explain your answer.

To determine

Reason for productive efficiency and productive inefficiency of the economy.

Explanation

The economy has the capacity to produce a maximum output using its resources and technology, but it did not use its full capacity of production; then, the economy is said to be in a productively inefficient condition. For example, the economy has the capacity of producing 200X and 300Y...

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