Question

If an economy is operating inside its production possibilities frontier:

A) it is producing efficiently. The economy cannot produce more of one good without simultaneously reducing the output of another good.
B) is producing inefficiently. If production was arranged more efficiently the economy can produce more on one good without sacrificing any production of another good.
C) it is producing at an unattainable point. You cannot be inside the Production Possibilities Frontier.
D) then opportunity cost approaches infinity. No economy want that to happen

Answer 1

Productive efficiency means it is impossible to produce more of one good without decreasing the quantity of another. Choices on the PPF are productive efficiency, while choices inside are wasteful.

Step-by-step explanation:

Productive efficiency means that, given the available inputs and technology, it is impossible to produce more of one good without decreasing the quantity that is produced of another good.

All choices on the Production Possibilities Frontier (PPF) display productive efficiency. As a firm moves from any one of these choices to any other, either one good increases and the other decreases or vice versa.

Choices inside the PPF are productively inefficient because it is possible to produce more of one good, the other good, or some combination of both goods.