a) Underutilization is shown by any point inside the manufacturing possibilities curve, where economic resources room not being used to their full potential.

b) efficiency is depicted by any allude along the curve, where economic resources are being provided to their complete potential and also the maximum amount of goods and also services is gift produced.




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Video Transcript

in pointing out the economic principle of a production possibilities curve, we oftentimes come throughout the terms under utilization and efficiency, and to ideal understand what these mean, we deserve to illustrate castle on a production possibilities curso map out to enforce right here just really an easy with product A and product be gift compared. What this manufacturing possibilities curve speak us, is what quantity of each can be developed along the curve. Therefore at every one of these various different points follow me here, we're walking to have actually some quantity of product be that can be developed to actually make the y and also some quantity of product A that deserve to be produced. And then the exact same thing continues. As we work our means down this production possibilities curve, you can see exactly how the various quantities of each are changing. So essentially, what the ax underutilization way is the we space not creating along the curve. Suppose we were developing instead in ~ a point right here. Well, currently we're creating these different quantities. Well, if we're developing at that point, if we're producing, say, quantity, among product A and quantity two of quantity of product B, we're no quite creating at preferably capacity. This is telling us that we can create all the way out to our manufacturing possibilities curve and also produce an ext of each. Therefore underutilization is failing to maximize our production possibilities. Whereas performance occurs anytime we develop anywhere on the curve like we signified with every one of these points. For this reason we're creating at any type of one of this points or almost everywhere else follow me the curve. That means that we room maximizing ours resources. Essentially, therefore underutilization occurs as soon as we fail to use our resources as efficiently as possible, whereas efficiency occurs as soon as we produce along that production possibilities frontier.