If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is
A) a straight horizontal line.
B) a straight downward-sloping line.
C) an upward-sloping line.
D) a vertical line.

Question

Quizplus · Accepted Answer

The constant opportunity cost implies that the resources used to produce one good can be easily transferred to the production of the other good, indicating a trade-off in producing either good. This results in a downward-sloping PPC, as the production of more of one good requires giving up increasing amounts of the other good. A straight horizontal line (A) would suggest that the economy can produce unlimited amounts of both goods, which is not realistic. An upward-sloping line (C) would indicate that producing more of one good raises the opportunity cost of producing the other, which contradicts the assumption stated in the question. A vertical line (D) would suggest that the opportunity cost of one good is infinite and cannot be produced at any cost.

If the Opportunity Cost of Producing Extra Units of One