Figure 2.2

-Refer to Figure 2.2. Steve Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2.2 represents his production possibility frontier?

Question

Figure 2.2
 
-Refer to Figure 2.2. Steve Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2.2 represents his production possibility frontier?

Quizplus · Accepted Answer

Graph C represents a bowed-out shape, which is consistent with the idea of increasing opportunity costs as Steve produces more of one type of animal and less of the other. This shape reflects the fact that some of his land is better suited for one type of animal than the other, and as he produces more of one type, he must give up increasingly larger amounts of the other type. Graph A represents a straight line, which is inconsistent with the idea of increasing opportunity costs, and Graph B has a bowed-in shape, which is also inconsistent with the idea of increasing opportunity costs.

Figure 2.2 -Refer to Figure 2.2. Steve Vignetto Raises Cattle and Llamas