Question : Assertion: The production possibilities curve (PPC) illustrates the maximum combination of two goods that an economy can produce.
Reason: Any point inside the PPC represents inefficiency, while points outside the PPC are unattainable given the available resources.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
The assertion is true. The PPC shows the different combinations of two goods that can be produced using all available resources and technology efficiently. It represents the boundary of production possibilities given the existing constraints.
The reason provided is a correct explanation of the assertion. Points inside the PPC represent an inefficient allocation of resources because the economy is not utilizing its resources fully, resulting in a lower level of production than what is possible. Points outside the PPC, on the other hand, represent combinations of goods that are currently unattainable given the available resources and technology. These points lie beyond the production capacity of the economy.
Therefore, the correct answer is Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
