If the production possibilities frontier between two goods is a straight line,then the
A) opportunity cost is not a ratio.
B) resources are equally productive in both goods.
C) line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points.
D) Both answers A and C are correct.
E) Both answers A and B are correct.

Question

Quizplus · Accepted Answer

If the production possibilities frontier is a straight line, it means that resources are equally productive in both goods. This is because a straight line indicates a constant opportunity cost for producing more of one good versus the other, which implies that resources can be easily shifted between the two goods without any change in productivity. Answer A is incorrect because even if the opportunity cost is constant, it is still a ratio of the two goods in terms of what must be given up to produce more of one good. Answer C is incorrect because the production possibilities frontier can still be a valid representation of the tradeoff between two goods even if there is overlap between the inefficient and unattainable production points.

If the Production Possibilities Frontier Between Two Goods Is a Straight