When society produces the combination of goods and services on the PPF that it v
ID: 1152115 • Letter: W
Question
When society produces the combination of goods and services on the PPF that it values the most highly, society has
achieved only production efficiency and definitely not allocative efficiency.
achieved only allocative efficiency definitely not production efficiency.
achieved both production efficiency and allocative efficiency.
achieved a free lunch.
perhaps achieved production efficiency and has perhaps achieved allocative efficiency.
a.achieved only production efficiency and definitely not allocative efficiency.
b.achieved only allocative efficiency definitely not production efficiency.
c.achieved both production efficiency and allocative efficiency.
d.achieved a free lunch.
e.perhaps achieved production efficiency and has perhaps achieved allocative efficiency.
Explanation / Answer
Solution: achieved both production efficiency and allocative efficiency
Explanation: Productive efficiency occurs when the optimal combination of inputs leads to maximum level of output at minimal costs; and allocative efficiency occurs when in an economy all goods and services are distributed as per consumer preferences. When a PPF achieves both society prefers it most
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