Production Possibilities Frontier (PPF) - Introduction and Productive Efficiency

2. Introductory Economic Models / Production Possibilities Frontier (PPF) - Introduction and Productive Efficiency / Problem 5

Problem 5

Allocative efficiency is achieved when:

The economy is producing at a point inside the PPF.

The economy is producing the maximum possible output.

The economy is producing at a point outside the PPF.

The mix of goods produced matches consumer preferences.