Is a combination of goods and services that is on a production possibilities frontier economically efficient?
A
Yes, it is technically and allocatively efficient.
B
Yes, it is technically efficient, at full employment, and allocatively efficient.
C
No, it is not at full employment.
D
No, it is not necessarily technically efficient.
E
No, it is not necessarily allocatively efficient.
Ans. B. Yes, it is technically efficient, at full employment, and allocatively efficient.
The production possibility frontier shows all the possible combinations of two goods when resources and techniques of productions are given.
Any combinations on the production possibility frontier show that resources and technique of production are at full employment ( all resources are in used ) and efficiently ( without any wastage) and effectively (economically or best ) utilised.
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