AP® Macroeconomics

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Interpreting Production Levels


Consider the information below then answer the question accordingly. The economy can produce the following goods at maximum production with full employment of resources.

A. 0 Guns - 10 Butter

B. 2 Guns - 8 Butter

C. 4 Guns - 6 Butter

D. 6 Guns - 4 Butter

E. 8 Guns - 2 Butter

F. 10 Guns - 0 Butter

If the country in question was producing at point C, but people actually wanted more guns and less butter, then


the economy is at allocative efficiency but not productive efficiency.


the economy is at productive efficiency but not allocative efficiency.


the economy is at productive and allocative efficiency.


the economy is at neither allocate nor productive efficiency.


The economy is at allocative efficiency and so it will never achieve productive efficiency evidenced by the ratios