University of Central Florida (UCF) ECO2013 Principles of Macroeconomics Practice Exam 1

Points that are above the production possibility frontier (PPF) are described as unattainable points. This is because the PPF illustrates the maximum possible output combinations of two goods that an economy can produce given its available resources and technology. When points lie above this curve, it indicates a level of production that is not feasible with the current resources, implying that the economy does not have enough resources or technology to achieve that level of output.

In contrast, points that are on the PPF represent efficient production, where resources are fully utilized, while points below the PPF indicate inefficient production, where some resources are underutilized. The term "optimal points" does not specifically refer to points above the PPF; instead, optimality in production would be assessed based on the trade-offs and goals of the economy, which can occur at different locations on or below the frontier. Therefore, the correct term for points above the PPF is indeed unattainable points, as they reflect levels of output that cannot be realized with current economic conditions.