Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good.This economy
A)should not change its production, because it cannot improve its allocation by shifting resources.
B)can improve its allocation by lowering the unemployment rate.
C)can improve its allocation by producing more of one good and less of the other.
D)can improve its allocation by producing more of both goods.

Question

Quizplus · Accepted Answer

The economy can improve its allocation by producing more of one good and less of the other until the marginal benefit equals the marginal cost for each good, achieving allocative efficiency.

Suppose That an Economy Is Producing on Its Production Possibilities