Any combination on the production possibilities frontier that provides the highest level of satisfaction to the people in the economy would be a combination of apparel and cell phones that would meet the allocative efficiency.
The Production Possibilities Frontier shows the maximum amounts of two commodities that can be created while using finite resources to create identical items. Allocative efficiency, then, is any location along this frontier that, taking into account people's needs and desires, provides them with the greatest level of enjoyment. For instance, people should choose any of the points from B to E if they prefer clothing to cell phones.
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