Each point on the production possibilities frontier achieves allocative efficiency.

Question

Quizplus · Accepted Answer

The production possibilities frontier (PPF) represents the maximum combination of goods or services that can be produced with a fixed amount of resources. While points on the PPF are productively efficient, meaning resources are fully utilized, allocative efficiency is achieved only when the production is in accordance with consumer preferences. Not every point on the PPF necessarily reflects allocative efficiency.

Each Point on the Production Possibilities Frontier Achieves Allocative Efficiency