If a firm is operating at any point inside the PPF, the firm is _______.

efficient firm

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inefficient firm

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poised for abnormal growth

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none of the above

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Solution

The correct option is C inefficient firm
If a firm is operating at any point inside the PPF, the firm is an inefficient firm. The points inside the PPF represent the inefficient utilization of resources. When the actual production falls short of its capabilities or there is a wastage or under-utilization of resources, the firm operates on a point inside the curve.

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