An economy operating on its production possibilities curve is characterized by which of the following?

An economy operating on its production possibilities curve (PPC) is indicative of efficiency in production. When the economy is at any point along the PPC, it demonstrates that it is utilizing its resources—such as labor, capital, and technology—at their maximum potential to produce goods and services. This means that the economy cannot produce more of one good without producing less of another, illustrating that it is operating at optimal efficiency.

In the context of the PPC, points inside the curve suggest inefficiency or underutilization, as resources are not being fully employed. Conversely, points outside the curve are unattainable with the current resources and technology. Economic growth, which would shift the PPC outward, does not apply to a situation where an economy is operating on the curve, as the growth reflects a change in quantity or quality of resources or advancements in technology rather than the allocation of existing resources. Thus, the correct characterization of an economy on its production possibilities curve is that it demonstrates efficiency.