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PP Curve and Production Mix

APMACR-TT1E4X

Suppose a Production Possibilities curve showed a current production level of 400 bikes and 200 cars on the production possibilities curve.

If society really wanted 375 bikes and 210 cars, which was also a point on the Production Possibilities curve, then which of the following statements is MOST accurate?

A

The economy is not at productive efficiency at a level of 400 bikes.

B

The economy is not at productive efficiency at a level of 375 bikes.

C

The economy is at allocative efficiency at 400 bikes production, but not at 375 bikes.

D

The economy is at productive and allocative efficiency at 375 bikes.

E

The economy is at allocative efficiency at 375 bikes but not productive efficiency.