Employees at Bank of America are good at providing banking services and workers at Ben & Jerryʹs are good at making ice cream. If some bankers are moved to making ice cream, we get a small increase in the amount of ice cream produced and a large decrease in the amount of banking services provided. If the PPF has banking services on the vertical axis and ice cream on the horizontal axis, the effect of the change reflects

Question

Quizplus · Accepted Answer

The scenario described represents a trade-off between banking services and ice cream production, which results in a bowed out PPF (also known as a concave PPF). This means that the opportunity cost of producing more ice cream increases as we produce more of it, in terms of forgone banking services. Therefore, the shape of the PPF reflects increasing opportunity costs. A shift to a flatter PPF would suggest a scenario with constant opportunity costs, while production efficiency is not directly relevant to the given scenario.

Employees at Bank of America Are Good at Providing Banking