Asked by Samantha Batchelder on May 27, 2024
Verified
The optimal point on a production possibilities curve is achieved where:
A) the smallest physical amounts of inputs are used to produce each good.
B) each good is produced at a level where marginal benefits equal marginal costs.
C) large amounts of capital goods are produced relative to consumer goods.
D) large amounts of consumer goods are produced relative to capital goods.
Production Possibilities Curve
A graphical representation that shows the maximum combination of goods and services that can be produced with a given set of resources and technology, illustrating the concept of opportunity cost.
Optimal Point
The most favorable or advantageous condition or value of a variable determined within a given set of constraints.
Marginal Benefits
The added pleasure or value that comes from the additional consumption or production of a good or service unit.
- Acquire knowledge about the concepts of marginal benefits and marginal costs, and their impact on determining the ideal level of output and the allocation of resources.
- Get familiar with the notion of optimal resource allocation and its attainment process.
Verified Answer
PR
prachi rasalMay 28, 2024
Final Answer :
B
Explanation :
The optimal point on a production possibilities curve is where the economy is producing the combination of goods that provides the highest level of satisfaction to the society. This occurs at the point where the marginal benefits of producing one more unit of a good are equal to the marginal costs of producing it. This is known as the allocative efficiency point. Therefore, option B is the best choice as it states that each good is produced at a level where marginal benefits equal marginal costs.
Learning Objectives
- Acquire knowledge about the concepts of marginal benefits and marginal costs, and their impact on determining the ideal level of output and the allocation of resources.
- Get familiar with the notion of optimal resource allocation and its attainment process.