What does it mean for an economy to be operating on its PPF?

When an economy is operating on its Production Possibility Frontier (PPF), it signifies that the economy is utilizing all its resources efficiently. The PPF represents the maximum possible output combinations of two goods or services that an economy can achieve when all resources are fully and efficiently employed.

Being on the PPF indicates that the economy is producing at its full potential, using every available resource—labor, capital, technology, etc.—to the best of its ability. At this point, any attempt to increase the production of one good would require a decrease in the production of another, reflecting the trade-offs involved in resource allocation. Therefore, operating on the PPF denotes optimal efficiency in the use of resources, where the economy is not wasting any resources and is maximizing its output capabilities.