If an economy is producing on its PPF,then it is definitely achieving
A) both production and allocative efficiency.
B) only production efficiency, but it definitely is not achieving allocative efficiency.
C) only allocative efficiency, but it is definitely not achieving production efficiency.
D) neither production nor allocative efficiency.
E) only production efficiency.

Question

Quizplus · Accepted Answer

When an economy is producing on its Production Possibility Frontier (PPF), it is achieving production efficiency because it is not possible to produce more of one good without producing less of another. However, this does not guarantee allocative efficiency, which occurs when the mix of goods being produced represents the mix that society most desires.

If an Economy Is Producing on Its PPF,then It Is