If there is always a three-for-one tradeoff between goods X and Y,then the PPF between X and Y is
A) a downward-sloping curve that is bowed outward.
B) a downward-sloping curve that is bowed inward.
C) a downward-sloping straight line.
D) an upward-sloping straight line.

Question

Quizplus · Accepted Answer

A three-for-one tradeoff between goods X and Y means that for every unit of X given up, three units of Y can be produced. This implies that the opportunity cost of producing X increases as we produce more of it. Therefore, the PPF between X and Y is a downward-sloping curve. However, since the tradeoff ratio is constant (three-for-one), the curve will be a straight line rather than bowed outward or inward. Therefore, the correct answer is a downward-sloping straight line, which is represented by choice C.

If There Is Always a Three-For-One Tradeoff Between Goods X