An efficient allocation of resources is demonstrated by a point
A)above the production possibilities frontier.
B)below the production possibilities frontier.
C)on the production possibilities frontier.
D)near the middle of the production possibilities frontier.

Question

Quizplus · Accepted Answer

The production possibilities frontier represents the maximum output that can be produced with the given resources and technology. Any point on the production possibilities frontier represents an efficient allocation of resources because all available resources are being fully utilized to produce the maximum possible output. Any point below the production possibilities frontier implies that resources are not being fully utilized, while any point above the frontier means resources are being overused or the technology is not efficient enough. Therefore, the best choice is option C, where the point lies on the production possibilities frontier.

An Efficient Allocation of Resources Is Demonstrated by a Point