Can the economy operate at point N (Not Attainable)? Explain why or why not.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

In macroeconomics, the Production Possibility Frontier presents the best scenario where the economy of a country is most efficient; thus, it is optimally producing its goods and services and allocating its resources. The unattainable point N is a point outside the PPF.

A country cannot produce at this point. The...

See
This Answer Now

Start your 48-hour free trial to unlock this answer and thousands more. Enjoy eNotes ad-free and cancel anytime.

Get 48 Hours Free Access

In macroeconomics, the Production Possibility Frontier presents the best scenario where the economy of a country is most efficient; thus, it is optimally producing its goods and services and allocating its resources. The unattainable point N is a point outside the PPF.

A country cannot produce at this point. The PPF is the country's most efficient way of allocating resources. While some economists argue that a country could operate at that point through more foreign investment, the fundamentals of economics dictate that in the case of an increase of production factors, the curve would shift outwards thus indicating growth.

There is only one scenario that truly fits these conditions. A country can consume outside its PPF through foreign trade. By actively engaging in the production of products it has a comparative advantage in and importing products it has a comparative disadvantage in, the consumption level can be outside the PPF. This is not a classical case and thus is deemed an exception.

Approved by eNotes Editorial Team