Final answer:
Each point on the production possibilities curve denotes efficiency in resource allocation and the maximum output of two commodities, indicating an economy's productive and allocative efficiencies at a given level of technology and resource endowment.
Step-by-step explanation:
Each point on the production possibilities curve represents efficiency in resource allocation and the maximum output of two products. The production possibilities frontier (PPF) shows the maximum possible production levels of two goods or services that an economy can achieve when all resources are fully and efficiently utilized. If the economy is on the PPF, it is producing at the most efficient level. Productive efficiency occurs when the economy is producing on the curve, meaning it is not possible to increase the production of one good without decreasing the production of the other. Allocative efficiency, on the other hand, is found at the specific point on the PPF that society prefers, showing the combination of goods and services that maximizes social welfare, taking into account consumers' preferences.