The difference between a straight-line production possibilities frontier and one that is concave is that:
A) the concave production possibilities frontier exhibits constant opportunity costs, while the straight line frontier does not.
B) the concave frontier reflects the problem of scarcity but the straight line frontier does not.
C) the straight line frontier reflects constant opportunity costs but the concave frontier does not.
D) neither the straight line nor the concave frontier reflect output limits.

Question

Quizplus · Accepted Answer

A straight-line production possibilities frontier indicates constant opportunity costs as you move along the frontier, meaning that the rate at which one good can be substituted for another remains the same. In contrast, a concave production possibilities frontier indicates increasing opportunity costs, where the rate of substitution changes, typically increasing as one moves from one end of the frontier to the other. This reflects the law of increasing opportunity costs, which states that as production of one good increases, the opportunity cost of producing an additional unit of that good also increases, due to factors such as the reallocation of resources that are not equally efficient in producing all goods.

The Difference Between a Straight-Line Production Possibilities Frontier and One