To tackle this question, let's understand the concept of the Production Possibility Frontier (PPF).
The PPF is a curve depicting the maximum efficient output possibilities for two products that an economy can achieve when all resources are fully employed. In this scenario, we are considering agricultural products on one axis and all other products on the other axis.
Now, consider the following scenarios based on the options given:
a. With unemployed resources, the economy is at a point above (outside) the PPF.
- This is incorrect because the area outside the PPF represents production levels that are unattainable given the current resources and technology. If there are unemployed resources, the economy cannot be producing at unattainable levels.
b. The PPF framework cannot be used if some resources are idle.
- This is incorrect as well. The PPF framework can be applied to analyze various situations, including when there are unemployed resources. It is a tool to understand potential production capabilities given the resources.
c. With unemployed resources, the economy is at a point below (inside) the PPF.
- This is the correct answer. When there are unemployed resources, the economy is not producing to its full potential. It means that the resources aren't being used efficiently, which causes the economy to produce somewhere below or inside the PPF.
d. The PPF takes into account only the resources that are fully employed.
- This is incorrect. The PPF considers the maximum potential output with all resources fully employed, but it doesn't ignore the analysis of situations where resources are not fully employed.
So, analyzing the provided choices, the logical conclusion is that with unemployed resources, the economy is at a point below (inside) the PPF. This means the economy isn't reaching its full productive potential due to some farm fields being left unused.
Hence, the answer to the question is:
c. With unemployed resources, the economy is at a point below (inside) the PPF.
