Producers can create their maximum combination of goods, as long as they:

• A. use resources inefficiently
• B. ignore opportunity costs
• C. operate on the production possibilities frontier
• D. produce at a point inside the production possibilities frontier

Answer: (C)

Verified step by step guidance

1. Understand the concept of the Production Possibilities Frontier (PPF): it represents the maximum possible combinations of two goods that a producer can create using all available resources efficiently.
2. Recognize that operating on the PPF means resources are used efficiently, and opportunity costs are considered because producing more of one good requires producing less of another.
3. Identify that producing inside the PPF indicates inefficient use of resources, meaning not all resources are fully utilized or are used inefficiently.
4. Note that ignoring opportunity costs would mean not considering the trade-offs between producing different goods, which contradicts the idea of maximizing production combinations.
5. Conclude that the correct condition for producers to create their maximum combination of goods is to operate on the production possibilities frontier, where resources are used efficiently and opportunity costs are accounted for.