FIGURE 12- 2 the Production Possibilities Boundary Shows Possible Combinations

FIGURE 12- 2 The production possibilities boundary shows possible combinations of guns and butter that can be produced by a country.The lower diagram shows demand and supply for butter.

-Refer to Figure 12- 2.Suppose demand and supply for butter are shown by D and S,respectively.And suppose the economy is at point (a) on the production possibilities boundary.Is this output of guns and butter allocatively efficient?

A) No,because the marginal cost to producers of the butter produced is more than the marginal value to consumers.
B) Yes,because the marginal cost of producing the butter equals the marginal value of consuming the butter.
C) No,because the marginal costs for guns and butter are not equated.
D) No,because the marginal value to consumers of the butter produced is greater than the marginal cost to producers.
E) Yes,because all points on the production possibilities boundary are allocatively efficient.