Question

Given below are two statements:
Statement (I): If resources are not fully and efficiently utilized, then the potential level of output will be less than the actual level of output.
Statement (II): The production possibility curve refers to the minimum possible level of output attainable with the available resources. In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

PPC shows maximum output with efficient resource use; actual output falls below potential if resources are underutilized.

Answer 1

The Correct Option is B

Step 1: Underused resources mean actual output falls below potential output, not the other way round, so Statement (I) is false.
Step 2: The PPC plots maximum attainable output combinations, not minimum ones.
Step 3: So Statement (II) is also false.
\[ \boxed{\text{Option (2): Both statements are incorrect}} \]