Question

Which of the following is true?

A) Allocative efficiency occurs at a specific point on the production possibilities curve that is valued above all alternatives.
B) Productive or technical efficiency occurs anywhere on the production possibilities curve.
C) Opportunity cost can be measured by the slope of the PPC curve.
D) All of the above

Answer 1

Productive efficiency is represented by points on the PPF, while allocative efficiency occurs at a specific point on the PPF that matches societal preferences. The correct answer is option D, all of the above.

Step-by-step explanation:

Productive efficiency means producing without waste and is represented by points on the production possibility frontier (PPF). It is impossible to produce more of one good without decreasing the quantity of another good. Allocative efficiency, on the other hand, represents the most desired allocation of goods and occurs at a specific point on the PPF. This means that the particular mix of goods being produced matches the preferences of society.

Therefore, the correct answer is option D) All of the above. Option A is incorrect because allocative efficiency occurs along the entire PPF, not just at a specific point. Option B is incorrect because productive efficiency only occurs on the PPF and not anywhere on it. Option C is incorrect because the slope of the PPF represents the opportunity cost, not the actual measurement of it.