All points on the production possibilities frontier
A) are production inefficient.
B) achieve allocative efficiency.
C) are production efficient but only one point achieves allocative efficiency.
D) are allocatively efficient but only one point achieves production efficiency.
E) are allocatively inefficient.

Question

Quizplus · Accepted Answer

Points on the production possibilities frontier (PPF) are all production efficient, meaning that all available resources are being used to their fullest potential. However, only one point on the PPF achieves allocative efficiency, which means that resources are being used to produce the combination of goods and services that is most desired by society. Therefore, while all points on the PPF are production efficient, only one point achieves both production efficiency and allocative efficiency.

All Points on the Production Possibilities Frontier