On Figure 1, mark two points: Point A at which production is efficient but too much coffee is produced for allocative efficiency; and point B, the point of allocative efficiency.

Use Figure 1, which shows a nation’s PPF, and Table 1, which shows its marginal benefit and marginal cost schedules, to work Problems 2 and 3.

Figure 1

Table 1

FIGURE 1 Coffee (pounds) 10 9 8 7 6 5 4 3 2 0 2 PPF 3 Bananas (pounds)