To achieve allocative efficiency,an economy
A) must produce on its PPF.
B) does not necessarily need to be production efficient.
C) must have increases in technology.
D) might leave some resources unemployed.
E) can produce either on or within its PPF.

Question

Quizplus · Accepted Answer

Allocative efficiency means producing the combination of goods and services that best satisfies society's preferences. This is achieved when an economy produces on its production possibilities frontier (PPF) because any point inside the PPF means that resources are being underutilized, while any point outside the PPF is not attainable with the given resources and technology. Therefore, choice A is the correct answer.

To Achieve Allocative Efficiency,an Economy