Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one watermelon:
A) will decrease as more watermelons are produced.
B) is constant.
C) will increase as more watermelons are produced.
D) is zero at point C.

Question

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of one watermelon:
A) will decrease as more watermelons are produced. 
B) is constant. 
C) will increase as more watermelons are produced. 
D) is zero at point C.

Quizplus · Accepted Answer

The straight-line nature of the production possibilities frontier indicates that the opportunity cost is constant. Also, there is no information given about the preferences or goals of the decision-maker, so it is impossible to determine an optimal choice.

Consider the Production Possibilities Frontier Displayed in the Figure Shown