3 Efficiency in the production possibilities model Suppose S

3. Efficiency in the production possibilities model Suppose Spain produces only two goods: corn and laptops. The following graph shows Spain\'s current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F 100 80 PPF 60 D E 60 80 100 CORN (Milions of bushels)

Solution

A: Unattainable

Explanation:

Because point A lies outside the PPF.

B: Efficient

C: Efficient

Explanation:

Because Point B and C is on the PPF.

D: Inefficient

E: Inefficient

Explanation:

Because point D and E lies within the PPF. At these points , all the resources are not fully utilised.

F: Unattainable

Explanation:

Because point F lies outside the PPF.