Refer to the following figure to answer the questions that follow.

-Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF)for the corresponding figure?
A) The law of increasing relative cost applies because the PPF is a straight line.
B) The law of increasing relative cost applies because the PPF is bowed outward.
C) The opportunity cost is constant because the PPF is a straight line.
D) The opportunity cost is constant because the PPF is bowed outward.
E) The opportunity cost decreases because the line has a negative slope.

Question

Refer to the following figure to answer the questions that follow.
 
-Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF)for the corresponding figure?
A) The law of increasing relative cost applies because the PPF is a straight line. 
B) The law of increasing relative cost applies because the PPF is bowed outward. 
C) The opportunity cost is constant because the PPF is a straight line. 
D) The opportunity cost is constant because the PPF is bowed outward. 
E) The opportunity cost decreases because the line has a negative slope.

Quizplus · Accepted Answer

The PPF in the figure is a straight line, which indicates that the opportunity cost of producing one good in terms of the other remains constant. This is because resources are perfectly adaptable between the two goods, and there are no diminishing returns or increasing marginal costs as more of each good is produced. Therefore, choice C is the best answer.

Refer to the Following Figure to Answer the Questions That