When will a production possibilities frontier be linear and not bowed out?
A) if no tradeoffs exist
B) if the tradeoff between the two goods is always at a constant rate
C) if unemployment is zero
D) if resources are allocated efficiently

Question

Quizplus · Accepted Answer

A linear production possibilities frontier occurs when the tradeoff between the two goods is always at a constant rate, meaning that resources are being used efficiently to produce the goods. This implies that there are no diminishing returns to specialization or that there are no differences in the opportunity cost of producing the two goods.

When Will a Production Possibilities Frontier Be Linear and Not