An economy's production of two goods is efficient if:

• A. the production of both goods is equal in quantity
• B. the opportunity cost of producing each good is zero
• C. resources are allocated to maximize equality among consumers
• D. it is impossible to produce more of one good without producing less of the other

Answer: (D)

Verified step by step guidance

1. Understand the concept of production efficiency in microeconomics, which means that resources are allocated in such a way that it is impossible to increase the production of one good without decreasing the production of another good.
2. Recall the definition of the Production Possibility Frontier (PPF), which illustrates the maximum possible output combinations of two goods given available resources and technology.
3. Recognize that points on the PPF represent efficient production levels, where producing more of one good requires sacrificing some quantity of the other good, reflecting the opportunity cost.
4. Note that if it were possible to produce more of one good without producing less of the other, the economy would not be operating on the PPF, and thus production would not be efficient.
5. Conclude that the correct condition for production efficiency is that it is impossible to produce more of one good without producing less of the other, which aligns with the concept of opportunity cost and efficient resource allocation.