On a production possibilities frontier (PPF) for butter and shoes, which point represents the optimal mix of producing butter and shoes?

• A. A point on the PPF curve
• B. A point inside the PPF curve
• C. Any point where only butter is produced
• D. A point outside the PPF curve

Answer: (A)

Verified step by step guidance

1. Understand what a Production Possibilities Frontier (PPF) represents: it shows the maximum possible output combinations of two goods (in this case, butter and shoes) that an economy can produce using all available resources efficiently.
2. Recognize that points on the PPF curve represent efficient production levels where resources are fully utilized, while points inside the curve indicate inefficiency (underutilized resources), and points outside the curve are unattainable with current resources.
3. Identify that the optimal mix of producing butter and shoes must be on the PPF curve because only then is the economy producing efficiently without wasting resources.
4. Consider that producing only butter or only shoes corresponds to extreme points on the PPF, but the optimal mix usually involves some combination of both goods, depending on preferences and opportunity costs.
5. Conclude that the optimal production point is any point on the PPF curve that balances the trade-offs between butter and shoes, reflecting efficient use of resources and the best possible combination given the economy's constraints.