Suppose that a country has the resources to produce 3 million cars and 100 million tons of iron ore every year. Why is it a problem if the country produces 2 million cars and 75 million tons of iron ore in one year?

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Kristina Gilbert

9 October, 10:08

Suppose that a country has the resources to produce 3 million cars and 100 million tons of iron ore every year. Why is it a problem if the country produces 2 million cars and 75 million tons of iron ore in one year?

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Answers (2)

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Cara Avila · Answer 1

Answer : Given the infrastructure and the resources for producing cars and iron ore, it wont be able to meet the demands of the country and the GDP will go down. If the country's demand is to produce 3 million cars and 100 million tons of iron ore is not met then it would have to either import will rise or export will go down resulting in loss for the whole country. It would eventually huge monetary loss for the country as the demands won't be met with the underutilized resources and the efficiency also decreases.

Pacheco · Answer 2

Underutilization of the available resources.

Explanation:

When a country has the capability of producing over 3M cars and 100M tons of iron ore, however, provides 2M vehicles and 75 tons of iron ore, it is termed as underutilization of the available resources as well as its production capabilities.

For the sake of businesses, a country can produce more than 1 M cars and over 25 tons of ore. However, if it provides less than that, then it is headed into making a lot of losses in the long run in terms of revenue.