Question

Suppose France produces only two goods: alfalfa and tablets. The following graph shows France's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. 

 Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, or unattainable. Check all that apply.

Answer 1

A - unattainable

B - Unattainable

C - Inefficient

D - Inefficient

E - Efficient

E - Efficient

Explanation: The points outside the production possibility frontier are unattainable points because the economy does not have the required resources to produce those combinations.

The points inside the production possibility frontier are inefficient points because the economy can produce more with the available resources.

The points on the production possibility frontier are efficient points because the economy is optimizing usages of resources by producing these combinations.