When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:

A. of the law of increasing opportunity costs. B. economic wants are insatiable. C. resources are limited. D. resources are specialized and only imperfectly substitutable.

Question

Business

Charlize Bridges

17 February, 06:14

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:

A. of the law of increasing opportunity costs. B. economic wants are insatiable. C. resources are limited. D. resources are specialized and only imperfectly substitutable.

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Answers (1)

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Kamryn Adams · Answer 1

C. resources are limited

Explanation:

When an economy reaches full employment level, it means all the resources have been utilized in the most efficient manner possible.

So in case of full employment, to increase the production of one commodity, resources have to be diverted from another commodity. This will reduce the production of the commodity from which resources have been diverted.

But, in case of full employment since resources are most efficiently utilized, there are no idle resources.

Hence production of more of commodity A will reduce production of commodity B because (C). resources are limited and scarce.