Final answer:
Toyota's Fujio Cho identified Overproduction as the type of waste to be eliminated. Productive efficiency is represented by points on the PPF, whereas allocative efficiency aligns with consumer preferences, often where marginal cost equals marginal benefit. Marketable permits represent a market-oriented environmental policy, which could result in cost-effective pollution reduction.
Step-by-step explanation:
In Toyota's philosophy, as articulated by Fujio Cho, the type of waste to be eliminated is Overproduction. Overproduction can lead to excess inventory, which ties up capital that could otherwise be used more efficiently and creates additional storage costs. By focusing on producing only what is needed, when it is needed, Toyota's lean manufacturing system aims to improve efficiency and reduce waste.
To answer the question with reference to a Production Possibility Frontier (PPF), choices that lie on the PPF curve represent productive efficiency because all resources are being used to their full potential. Choices inside the curve indicate inefficiency, while points outside are unattainable with the current resources. Allocative efficiency occurs at the point on the PPF that aligns with consumers' preferences; this is usually where marginal benefit equals marginal cost. Without detailed information about consumer preferences, it is not possible to identify allocative efficiency simply by looking at the PPF.
Regarding environmental policies, a command-and-control policy typically mandates specific limits or technologies, while a market-oriented policy uses economic incentives, such as tradable permits, to achieve desired outcomes. In the context of the firms Elm, Maple, Oak, and Cherry, issuing marketable permits would lead to a more cost-effective distribution of pollution reduction efforts, as each firm would reduce their pollution to the point where their marginal cost of doing so equals the market price of the permit.