A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?
A)The straight-line boundary illustrates constant opportunity costs,whereas the concave boundary illustrates increasing opportunity costs.
B)The concave boundary illustrates constant opportunity costs,whereas the straight-line boundary illustrates decreasing opportunity costs.
C)The straight-line boundary does not show scarcity,whereas the concave boundary does.
D)The straight-line boundary shows opportunity cost,whereas the concave boundary does not.
E)A straight-line boundary is associated with a command economy,whereas a concave boundary is associated with a free-market economy.

Question

Quizplus · Accepted Answer

A straight-line production possibilities boundary illustrates constant opportunity costs, meaning that the opportunity cost of producing one unit of a good remains constant as more of that good is produced. In contrast, a concave boundary illustrates increasing opportunity costs, meaning that the opportunity cost of producing one unit of a good increases as more of that good is produced. This is because resources are not perfectly adaptable to producing both goods, and as more resources are devoted to producing one good, there are fewer resources available to produce the other good, which increases the opportunity cost of producing more of the first good.

A Straight-Line Production Possibilities Boundary Differs from a Concave Boundary