Production activities for a customized product represent a(n):

• A. example of productive inefficiency, since resources are not used to their full potential
• B. point inside the production possibilities frontier, indicating underutilization of resources
• C. point on the production possibilities frontier, demonstrating productive efficiency
• D. movement beyond the production possibilities frontier, showing unattainable output

Answer: (C)

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 a point on the PPF indicates productive efficiency, meaning resources are used to their full potential without waste.
3. Recognize that a point inside the PPF indicates productive inefficiency or underutilization of resources, where the economy could produce more of one or both goods without sacrificing output.
4. Identify that a point beyond the PPF is unattainable with current resources and technology, representing output levels that cannot be achieved at present.
5. Apply these concepts to the customized product scenario: since production activities represent a point on the PPF, it demonstrates productive efficiency, meaning resources are being used optimally.