If Harold must decrease production of some other good to increase production of good X, then Harold
A)has a linear production possibilities frontier.
B)is producing outside his production possibilities frontier.
C)is producing inside his production possibilities frontier.
D)is producing on his production possibilities frontier.
E)prefers good X to any other good.

Question

Quizplus · Accepted Answer

This scenario describes the concept of opportunity cost, which is a fundamental principle when producing on the production possibilities frontier (PPF). The need to decrease production of another good to increase production of good X indicates that resources are being fully utilized and any increase in production of one good requires a decrease in another, a characteristic of producing on the PPF.

If Harold Must Decrease Production of Some Other Good to Increase