According to the production possibilities frontier (PPF), which point represents productive efficiency?

• A. A point located outside the PPF curve
• B. Any point regardless of its location relative to the PPF
• C. A point located on the PPF curve
• D. A point located inside the PPF curve

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 points on the PPF curve indicate productive efficiency because the economy is using all its resources without any waste, producing the maximum output possible.
3. Recognize that points inside the PPF curve represent inefficiency, meaning resources are underutilized or wasted, so the economy could produce more of one or both goods without sacrificing anything.
4. Note that points outside the PPF curve are unattainable with the current resources and technology, as they require more resources than are available or better technology than currently exists.
5. Therefore, the point that represents productive efficiency is any point located exactly on the PPF curve.