Production Possibility Curve (6)

Efficient Utilisation of Available Resources: If the country chooses the combination point M, i.e., if it produces 0X0 of paddy and 0Y0 of natural rubber then it would indicate inefficient utilisation of resources. Here, the country can increase the production of paddy from 0X0 to 0X1 by keeping the production of natural rubber unchanged at 0Y0 (i.e., the country can move from point M to T). Similarly, in this situation, the country can also increase the production of natural rubber from 0Y0 to 0Y1 by keeping the production of paddy unchanged at 0X0 (i.e., the country can move from point M to N.). Thus, if the country chooses any combination of X and Y on the production possibility curve, it implies efficient utilisation of available resources. However, if it chooses any combination that lies below that curve, it would indicate inefficient utilisation or underutilisation of existing resources.