Choose the correct statement.
A)A marginal cost curve that is a horizontal line is derived from a PPF that has a bowed-out shape.
B)A marginal cost curve that is upward sloping is derived from a PPF that has a constant slope.
C)A marginal cost curve that is vertical is derived from a PPF that has a bowed-out shape.
D)A marginal benefit curve that is downward sloping is derived from a PPF that has a bowed-out shape.
E)A marginal cost curve that is a horizontal line is derived from a PPF that has a constant slope.

Question

Quizplus · Accepted Answer

A horizontal marginal cost curve indicates that the cost of producing additional units remains constant, meaning that the production function has constant returns to scale. This in turn means that the PPF has a constant slope, leading to choice E as the correct statement.

Choose the Correct Statement