Figure 2-11 Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans, and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-11 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory.
-On a diagram of a production possibility frontier, opportunity cost is represented by the production possibility frontier shifting outward.

Question

Figure 2-11  Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans, and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-11 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory.
-On a diagram of a production possibility frontier, opportunity cost is represented by the production possibility frontier shifting outward.

Quizplus · Accepted Answer

Opportunity cost is represented by the slope of the production possibility frontier, not by it shifting outward. An outward shift indicates economic growth or an increase in resources.

Figure 2-11 Mercedes Benz Produces a Full Line of Luxury