Refer to Figure 3-3. A change from point A to point E on the production possibilities frontier represents a(n):

• A. shift of the production possibilities frontier outward
• B. movement from an inefficient point to an efficient point
• C. decrease in available resources
• D. movement from an efficient point to an unattainable point

Answer: (B)

Verified step by step guidance

1. Understand what a Production Possibilities Frontier (PPF) represents: it shows the maximum possible output combinations of two goods that an economy can produce given its resources and technology.
2. Identify the characteristics of points on the PPF: points on the curve are efficient (maximum output), points inside the curve are inefficient (underutilization of resources), and points outside the curve are unattainable with current resources.
3. Analyze the movement from point A to point E: determine whether these points lie inside, on, or outside the PPF curve to classify the movement as efficient, inefficient, or unattainable.
4. Recognize that moving from an inefficient point (inside the curve) to an efficient point (on the curve) means better utilization of resources without changing the PPF itself.
5. Conclude that this movement does not represent a shift of the PPF or a change in resources, but rather an improvement in efficiency.