Table 2-3
Production Possibilities for Libraryland

-Refer to Table 2-3.Which of the following statements is correct?

Question

Table 2-3
Production Possibilities for Libraryland
 
-Refer to Table 2-3.Which of the following statements is correct?

Quizplus · Accepted Answer

The production possibility frontier (PPF) in Table 2-3 is not a straight line, but a bowed-out curve, indicating increasing opportunity costs. As we move down along the curve, producing more and more books, the opportunity cost of an additional 100 books increases. For instance, to produce an additional 100 books from point D (400 books and 200 magazines), Libraryland must give up 200 magazines, or 2 magazines per book. But, to produce another 100 books from point E (500 books and 100 magazines), Libraryland must forfeit 400 magazines, or 4 magazines per book. Therefore, the correct answer is D.

Table 2-3 Production Possibilities for Libraryland