Suppose that Ned can produce either 10 units of wheat or 20 units of corn in a day. Which of the following combinations of wheat and corn represents productive efficiency on Ned's production possibilities frontier?

• A. 5 units of wheat and 10 units of corn
• B. 10 units of wheat and 0 units of corn
• C. 0 units of wheat and 20 units of corn
• D. 8 units of wheat and 16 units of corn

Answer: (C)

Verified step by step guidance

1. Understand that the Production Possibilities Frontier (PPF) represents all combinations of two goods that a producer can produce using all available resources efficiently.
2. Identify Ned's maximum production capabilities: 10 units of wheat or 20 units of corn per day. This means if Ned produces only wheat, he can produce 10 units, and if only corn, 20 units.
3. Express the PPF as a linear equation relating wheat (W) and corn (C). Since producing 10 units of wheat uses all resources, and producing 20 units of corn uses all resources, the equation is: \(\frac{W}{10} + \frac{C}{20} = 1\).
4. Check each combination against the PPF equation to see if it lies on the frontier (productive efficiency means the combination satisfies the equation exactly). For example, for 5 units of wheat and 10 units of corn, substitute into the equation: \(\frac{5}{10} + \frac{10}{20} = 0.5 + 0.5 = 1\).
5. Conclude that any combination where \(\frac{W}{10} + \frac{C}{20} = 1\) represents productive efficiency on Ned's PPF, while combinations where the sum is less than 1 are inefficient and greater than 1 are unattainable.