The following figure shows the production possibilities frontier for Good A and Good B. In the figure below, point g is efficient because:

A) the only way to increase production of Good A is by decreasing production of Good B.
B) the economy can increase production of both Good A and Good B from point g.
C) it is impossible to move to any other point along the production possibilities frontier.
D) it is impossible to move to any other point inside the production possibilities frontier.
E) no other production possibilities frontier exists.

Question

The following figure shows the production possibilities frontier for Good A and Good B. In the figure below, point g is efficient because:

A) the only way to increase production of Good A is by decreasing production of Good B. 
B) the economy can increase production of both Good A and Good B from point g. 
C) it is impossible to move to any other point along the production possibilities frontier. 
D) it is impossible to move to any other point inside the production possibilities frontier. 
E) no other production possibilities frontier exists.

Quizplus · Accepted Answer

Point g is efficient because it is on the production possibilities frontier, which represents the maximum possible production of both goods given the available resources and technology. Any point inside the production possibilities frontier would represent an inefficient use of resources, and any point outside the frontier would be unattainable with the current resources and technology. Option A correctly states that at point g, the only way to produce more of Good A is by decreasing production of Good B, demonstrating the tradeoff inherent in producing multiple goods with limited resources.

The Following Figure Shows the Production Possibilities Frontier for Good