What type of economy is indicated by combinations that are on the production possibilities frontier?

A combination that lies on the production possibilities frontier (PPF) represents an efficient economy. This is because such combinations utilize resources fully and effectively, meaning that producing more of one good would require reducing the production of another good. The PPF illustrates the maximum output possibilities for two goods given a set amount of resources and technology. Points on the frontier signify that all resources are being used optimally to produce goods, achieving the highest possible output with the available inputs. This contrasts with points inside the curve, which indicate inefficiencies where not all resources are being utilized effectively.

Thus, identifying the economy as efficient when positioned on the PPF highlights the concept of productive efficiency, where production takes place using the least amount of resources for the maximum output possible, meeting the needs of an economy without waste.