There are instances when a country does not take full advantage of all resources, and produces a quantity of goods below the PPC. For example, at Point E in Diagram 2.2, Country A makes 300 guns and 900 loaves of bread. However, Country A is capable of making more by utilizing some of its unused resources. For example, Point B allows the country to make 100 loaves of bread and 400 guns. At Point E, some of Country A’s resources are unused; they remain idle. This is called underuse of resources.

Diagram 2.2

Production Possibility Curve for Country A