The diagram below shows the production possibility frontier (PPF) for an economy that produces agricultural goods and manufactured goods. The economy is initially operating at point P P\,P within its frontier.
If the economy now moves from point P P\,P to point Q Q\,Q on its frontier, it will
achieve both productive and allocative efficiency.
increase the potential capacity and trend growth rate of the economy.
obtain more agricultural goods, manufactured goods, or both, at zero opportunity cost.
experience a decrease in productive efficiency as resource utilization changes.
