The allocation of resources is said to be efficient (or “efficient and productive”).

In other words, this describes a situation where the economy is operating on its production possibility frontier (PPF): you can only get more of one good by sacrificing some of another, so resources are being used in the best technologically possible way.

Quick Scoop

  • You are at a point where all resources are fully and efficiently used.
  • Any increase in one good forces a decrease in another good.
  • Graphically, this is a point on the PPF, not inside it (inside would be inefficient).

In exam-style questions, when you see “it is possible to increase the production of one good only by decreasing the production of another,” the correct phrase is: efficient (productive) allocation of resources.

TL;DR:
Such an allocation is called efficient and productive (a point on the production possibility frontier).

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