Given an initial endowment of factor inputs,
A)there is only one efficient level of outputs.
B)there are many efficient output levels for the firms.
C)a production possibility curve can be determined without knowing the contract curve.
D)the midpoint on the production contract curve is the most equitable point.

Question

Quizplus · Accepted Answer

The concept of multiple efficient output levels stems from the idea that, given a set of inputs, a firm can produce various combinations of outputs efficiently. This is represented in the production possibility frontier (PPF), where any point on the curve indicates an efficient allocation of resources. Different points on the PPF represent different combinations of outputs that can be efficiently produced with the given inputs, hence the statement that there are many efficient output levels for firms.

Given an Initial Endowment of Factor Inputs