If a country is operating at a point of production efficiency,
A) it enjoys a free lunch when increasing production.
B) it produces on its production possibilities frontier.
C) it must specialize in the production of a good.
D) it operates on its trade line.
E) it cannot be producing at its point of comparative advantage.

Question

Quizplus · Accepted Answer

Operating at a point of production efficiency means that the country is producing at the maximum possible output with the given resources and technology. This implies that the country is producing on its production possibilities frontier (PPF), where all resources are fully utilized. Therefore, option B is the best choice. Options A, C, and D are incorrect as they are unrelated to the concept of production efficiency. Option E is incorrect as the concept of comparative advantage is different from the concept of production efficiency.

If a Country Is Operating at a Point of Production