Question

In a competitive market, all of the choices along the production possibility frontier display (-----) efficiency, while the specific choice on the frontier that society picks in the one with (-----) efficiency.a. Productive; Allocativeb. Allocative; Productivec. Allocative; Allocatived. Productive; Productive

Answer 1

Answer:

The correct answer is letter "A": Productive; Allocative.

Explanation:

A Production Possibility Frontier (PPF) is a range of answers to the question: what is the company's maximum production capacity? Producing at a maximum level means creating as many jobs and using as many resources as possible. This maximizes employment and minimizes unused resources. Within this approach, the PPF represents productive efficiency. When production represents consumer preferences we are in a case of allocative efficiency.