An economy is efficient if there are no missed opportunities which means there is no way to make some people better off without making other people worse off. For instance, if you are producing inside the PPC then this is inefficient because increasing production to move toward the PPC would not entail an opportunity cost. Suppose you were the teacher and you noticed there were too many students for the number of chairs in your classroom. The classroom next to you could accommodate all students so that no one was standing and everyone had a seat. This is an example of inefficiency because the school was able to make people better off without making people worse off. If the classroom was being used and the teacher had to kick out another class then this would have represented an efficient use because this would have represented a better situation for one group but a worse off situation for another . In this situation you can't gain without giving up something. It's similar to being on the PPC; when you move from one point to another, you can 't gain without giving something up. To be efficient if must exercise productive and allocative efficiency. Productive means it must produce as much of each good as it can, given the production of other goods. Allocative efficiency means to produce the mix of goods that people want to consume.