Question
The definition of efficiency implies that production is carried out on the production possibilities frontier. True False
Ask by Coleman Lane. in the United States
Mar 21,2025
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Answer
Efficiency means production is on the production possibilities frontier.
Solution
The statement is **True**.
The production possibilities frontier (PPF) represents the maximum output combinations of two goods that can be produced with available resources and technology. When production is carried out on the PPF, it indicates that resources are being used efficiently, meaning that it is not possible to produce more of one good without producing less of another. Therefore, efficiency in production implies that the economy is operating on the PPF.
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True! Efficiency in economics means utilizing resources in the best way possible to maximize output. When production occurs on the production possibilities frontier (PPF), it indicates that the economy is operating at its full potential—no resources are wasted, and it's not possible to produce more of one good without sacrificing another. When discussing efficiency, it’s also crucial to consider opportunity cost, which refers to what you give up when choosing one option over another. A well-managed economy strives to find that sweet spot on the PPF, ensuring that resources, like time and materials, are allocated in a way that communities get the most bang for their buck!
