For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese.Germany can produce one watch for every 100 pounds of cheese it produces.Which of the following is true concerning production possibilities curves in both countries?

Question

Quizplus · Accepted Answer

Since Denmark must give up 50 pounds of cheese for each watch produced, its production possibilities frontier for watches will have a steeper slope than its production possibilities frontier for cheese. On the other hand, Germany can produce 1 watch for every 100 pounds of cheese, so its production possibilities frontier for watches will have a shallower slope than its production possibilities frontier for cheese. Therefore, on a graph with cheese on the vertical axis, the slope of Germany's production possibilities frontier is steeper than Denmark's.

For Each Watch Denmark Produces, It Gives Up the Opportunity