Which of the following is true of a production possibility frontier?
a. Producing on the production possibilities frontier implies productive efficiency, and society producing where it wants to be producing implies allocative efficiency.
b. Producing on the production possibilities frontier implies allocative efficiency, and society producing where it wants to be producing implies productive efficiency.
c. Producing on the production possibilities frontier implies both productive efficiency and allocative efficiency.
d. Producing where the society wants to be producing implies both productive efficiency and allocative efficiency.
a
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A quantity less than the equilibrium quantity in a competitive market is inefficient because
A) the marginal benefit of another unit is greater than its marginal cost. B) too much of the good is being produced. C) the marginal cost of another unit is greater than its marginal benefit. D) the marginal benefit of another unit is not equal to zero. E) the marginal benefit is not maximized.
According to opportunity-cost theory, the cost to an airline of letting its employees fly at no charge
A) depends upon the alternatives available to the employees. B) is greater around the Christmas holidays. C) is zero. D) will depend upon the value employees place upon travel.
Refer to Figure 5-9. The efficient output is
A) Q1. B) Q2. C) Q3. D) Q4.
Suppose velocity is 3, real output is 9000, and the price level is 1.5. What is the level of real money demand in this economy?
A) 2000 B) 3000 C) 6000 D) 30,000