The following diagrams show the production possibilities boundaries for Austria and Switzerland,for the production of bicycles and shoes. FIGURE 32-2 Refer to Figure 32-2.The diagrams illustrate that the ________ is lower in Austria than in Switzerland.

Question

The following diagrams show the production possibilities boundaries for Austria and Switzerland,for the production of bicycles and shoes.  FIGURE 32-2 Refer to Figure 32-2.The diagrams illustrate that the ________ is lower in Austria than in Switzerland.

Quizplus · Accepted Answer

The production possibility boundary is determined by the opportunity cost of producing one good in terms of the other. The flatter the boundary, the lower opportunity cost of producing one good in terms of the other. In this case, the boundary for bicycles in Austria is flatter compared to Switzerland, indicating that the opportunity cost of producing bicycles in Austria is less than in Switzerland. Hence, the answer is A - opportunity cost of producing shoes is lower in Austria than in Switzerland.

The Following Diagrams Show the Production Possibilities Boundaries for Austria