Figure 2.1. Production Possibilities Frontier
-Refer to Figure 2.1.If the relative cost of steel were to rise, then the production possibilities frontier would
A) become steeper.
B) become flatter.
C) shift inward in a parallel manner.
D) shift outward in a parallel manner.

Question

Figure 2.1. Production Possibilities Frontier  
-Refer to Figure 2.1.If the relative cost of steel were to rise, then the production possibilities frontier would
A) become steeper. 
B) become flatter. 
C) shift inward in a parallel manner. 
D) shift outward in a parallel manner.

Quizplus · Accepted Answer

A rise in the relative cost of steel would make it more expensive compared to producing aluminum, which would make it less profitable to produce steel. This would result in a shift in resources away from steel production and towards aluminum production, causing the production possibilities frontier to become steeper.