If,in a given economy,production is taking place at a point inside the production possibility frontier:
A)resource allocation is technically and allocatively efficient.
B)resource allocation is technically efficient but allocatively inefficient.
C)resource allocation is technically inefficient and allocatively efficient.
D)resource allocation is technically and allocatively inefficient.

Question

Quizplus · Accepted Answer

When production occurs inside the production possibility frontier (PPF), it indicates that resources are not being used to their full potential, leading to technical inefficiency. Additionally, because the economy is not producing the optimal mix of goods given consumer preferences, it is also allocatively inefficient.

If,in a Given Economy,production Is Taking Place at a Point