education.

FIGURE 2.4 Productive and Allocative Efficiency Productive efficiency means it is impossible to produce more of

one good without decreasing the quantity that is produced of another good. Thus, all choices along a given PPF like

B, C, and D display productive efficiency, but R does not. Allocative efficiency means that the particular mix of goods

being produced—that is, the specific choice along the production possibilities frontier—represents the allocation

that society most desires.

Productive efficiency means that, given the available inputs and technology, it is impossible to produce more

of one good without decreasing the quantity that is produced of another good. All choices on the PPF in Figure

2.4, including A, B, C, D, and F, display productive efficiency. As a firm moves from any one of these choices to

any other, either healthcare increases and education decreases or vice versa. However, any choice inside the
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