When a firm or economy is operating efficiently, it is operating
A)outside its production possibilities frontier.
B)inside its production possibilities frontier.
C)on its production possibilities frontier.
D)at the intersection of the production possibilities frontier and the vertical axis.
E)at the intersection of the production possibilities frontier and the horizontal axis.

Question

Quizplus · Accepted Answer

Operating on the production possibilities frontier means that the firm or economy is producing the maximum output possible given its resources and technology. This is the most efficient level of production. Operating inside the frontier means that the firm or economy is not using all of its resources efficiently, and operating outside the frontier is not possible given the current resources and technology.

When a Firm or Economy Is Operating Efficiently, It Is