On a typical Production Possibilities Frontier (PPF) graph, which points represent productive efficiency?

• A. Points inside the PPF curve
• B. Points located on the PPF curve
• C. Any point on or inside the PPF curve
• D. Points outside the PPF curve

Answer: (B)

Verified step by step guidance

1. Understand the concept of the Production Possibilities Frontier (PPF): it represents the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized.
2. Recall that points on the PPF curve indicate that resources are being used efficiently, meaning the economy is producing the maximum output possible given its resources and technology.
3. Recognize that points inside the PPF curve represent inefficient use of resources, where the economy could produce more of one or both goods without sacrificing anything.
4. Note that points outside the PPF curve are unattainable with the current resources and technology, as they represent production levels beyond the economy's capacity.
5. Conclude that productive efficiency is represented by points located exactly on the PPF curve, where the economy is maximizing its production potential.