Exhibit 2-9 Production possibilities curve

-If the economy represented in Exhibit 2-9 is operating at Point W:

Question

Exhibit 2-9 Production possibilities curve

-If the economy represented in Exhibit 2-9 is operating at Point W:

Quizplus · Accepted Answer

Operating at Point W in a typical production possibility frontier (PPF) model implies that to produce more of one good (in this case, food), some quantity of the other good (tractors) must be forgone. This is due to the law of increasing opportunity costs, which states that increasing production of one good requires larger and larger sacrifices of the other good.

Exhibit 2-9 Production Possibilities Curve