Choco Fantasy is a firm that produces both dark chocolates as well as liquor chocolates. It can produce 10,000 bars of dark chocolate per month if all its resources are used to produce only this variety. Similarly, using all its resources in the production of liquor chocolates, the firm can produce 8,000 bars per month.However, during a given month, the firm produces both varieties. Which of the following, if true, would suggest that the firm is operating at a point inside its PPF?
A. Current demand for both varieties is so high that similar chocolates are being imported by the country.
B. The firm believes in maintaining a certain amount of excess capacity to meet unexpected changes in demand.
C. All resources employed by Choco Fantasy are always put to their best use.
D. The firm is paying overtime to its workers as most of them are working extra hours to meet the peak season demand.
E. The firm is planning to hire more resources because of an anticipated increase in the demand for its chocolates

Production possibility curve shows the different combinations of two products that can be manufactured by a business. The production possibility frontier is the maximum combination of products a business can produce with given resources.

Beyond this point increase in production of one will lead to decreased production of the other.

So if excess stock of both products is being kept in anticipation of demand, the company is still operating within its PPF and has excess resources.