If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?
A) A large amount of unemployment must exist.
B) Producing more of one good gives the economy a free lunch.
C) There is no tradeoff between the two goods.
D) Resources are equally productive at producing either product.
E) There is no decrease in the production of one good when the production of the other is increased.

Question

Quizplus · Accepted Answer

A straight-line production possibilities frontier indicates constant opportunity costs, meaning resources are equally productive in producing either good.

If the Production Possibilities Frontier Between Bottled Water and Water