Refer to Figure 2-3. Which point(s) on the Production Possibilities Frontier (PPF) represent productive efficiency?

• A. Any point inside the PPF curve
• B. Any point located on the PPF curve
• C. Any point at the origin
• D. Any point outside the PPF curve

Answer: (B)

Verified step by step guidance

1. Understand the concept of the Production Possibilities Frontier (PPF): it represents all the combinations of two goods that an economy can produce using all available resources efficiently.
2. Recall that points on the PPF curve show maximum productive efficiency, meaning the economy is producing the maximum output possible with its resources.
3. Recognize that points inside the PPF curve indicate underutilization of resources, so they are not productively efficient.
4. Note that points outside the PPF curve are unattainable with current resources and technology, so they cannot represent productive efficiency.
5. Conclude that only points located exactly on the PPF curve represent productive efficiency.