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I have this doubt that when we have a concave PPF like the one below is it possible for us to determine the best allocation using just the PPF alone ?

I understand that any point in the ppf curve is efficient and in the below example point a is inefficient. So for us to determine the best allocation for products can we blindly take any possible combination in the PPF curve ? or is there a specific point in the PPF curve which is the best

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  • $\begingroup$ Can you please define "best"? $\endgroup$
    – Giskard
    Commented Sep 4, 2022 at 6:16

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I anticipate there will be some clarification of the question but here are the general points that should be covered here in a discussion of PPFs.

First, points further to the upper right in a PPF are preferred to those in the lower left because of the law that more is better. Particularly, point D is strictly superior to point A. Strictly superior means that D has more of at least one good than A, and less of no goods. The same cannot be said of A and B or A and C. For example, B makes sense for wartime production and C makes sense for peacetime. But D is always better than A - in war or peace.

Second, "best" is arbitrary. However, we can give a good answer to the spirit of your inquiry with utility curves. If the country's central planner has some sort of aggregate utility curve, then the value with the highest utility that is also on the PPF is the one the country's central planner prefers to produce at.

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    $\begingroup$ "the law that more is better" mmm, guns are bad, mmmkay? $\endgroup$
    – Giskard
    Commented Jan 31, 2023 at 17:51
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    $\begingroup$ mumbles something about free disposal and no externalities. $\endgroup$ Commented Jan 31, 2023 at 20:06
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I think that the sort of efficiency you are describing isn't the sort of efficiency that one describes when speaking about the PPF curve. Any point on the curve is "productively efficient" in that they are the most you can produce given some input constraint.

"The best allocation" has nothing to do with productive efficiency. The best allocation could be at the point $(0,0)$ if some economic agent (e.g., business, government) is best off producing neither of the goods. For example, the government may have the resources to produce hard drugs (e.g., cocaine), but the "best allocation" would be to produce no cocaine since it decreases the welfare of society. In this case any point on the PPF or to the right of the origin would be allocatively inefficient.

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