Production is considered efficient if the economy is producing at a point:

• A. on the production possibilities frontier
• B. inside the production possibilities frontier
• C. at the origin of the production possibilities frontier
• D. outside the production possibilities frontier

Answer: (A)

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 that an economy can produce given its resources and technology.
2. Recognize that points on the PPF indicate efficient production because the economy is utilizing all available resources fully and efficiently.
3. Identify that points inside the PPF represent inefficient production since some resources are underutilized or wasted.
4. Note that points outside the PPF are unattainable with the current resources and technology, meaning the economy cannot produce those combinations at present.
5. Conclude that production is considered efficient only when the economy is producing at a point on the production possibilities frontier.