PPC Shift from Inefficiency to Efficiency

Steps:

• Identify X as a point inside the PPC, indicating underutilized resources or inefficiency.
• Identify Y as a point on the PPC frontier, representing full resource utilization.
• Note the movement from X to Y shows increased output without expanding resources.
• Conclude this reflects improved productive efficiency in the economy.

Why B is correct:

• Productive efficiency occurs when an economy operates on the PPC, maximizing output from given resources, as defined in economic theory.

Why the others are wrong:

• A: Living standards depend on consumption levels, not directly on PPC position without welfare data.
• C: Moving to the PPC reduces unemployment, not increases it.
• D: Opportunity cost is the trade-off ratio along the PPC, unrelated to this inward-to-frontier shift.

Final answer: B