Which of the following statements is true of the efficiency frontier?

Question

Quizplus · Accepted Answer

Not all positions on the efficiency frontier are viable because some may not be profitable or sustainable in the long run. The efficiency frontier shows the maximum possible output a firm can achieve with given inputs, but it is up to the firm to choose the most efficient position on the frontier that aligns with its objectives and resources. The other options are incorrect: A is false because a firm should aim to be on the efficiency frontier to maximize profitability, C is incomplete because the efficiency frontier is also influenced by competition and market conditions, D is false because positions on the frontier are equally efficient, and E is too general because the shape of the efficiency frontier can vary depending on the production technology and input combinations.

Which of the Following Statements Is True of the Efficiency