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.

KT
Answered by Karl T. Economics tutor

1815 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Why cannot firms in perfect competition sustain supernormal profits in the long run?


Evaluate the microeconomic impacts of a sugar tax


How can changes in the interest rate affect aggregate demand?


What is the purpose of trying to achieve economic efficiency?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning