On a Production Possibility Frontier diagram, indicate a point where resources are efficiently allocated (label X) and an inefficient one (labelled Y). Explain why X is efficient, why Y is inefficient and how output could be increased from both.

Concave PPF diagram - point X anywhere on the curve, point Y strictly inside the curve. X is efficient because an increase in output of one good cannot be achieved without reducing the output of the other (fully utilising resources). Y is inefficient because can increase output of one good without reducing another. To increase output from Y, don't need to reallocate, just use up spare capacity (move towards the curve). From X, either reallocate resources (move along curve to another efficient point) or need e.g. natural resource discovery to shift out PPF.