Suppose there are only two goods produced in our economy-snowplows and helicopters.If there is always a two-for-one tradeoff between the production of these two goods (in terms of opportunity cost),then the production possibilities boundary between snowplows and helicopters is
A)a downward-sloping curve convex to the origin.
B)circular.
C)a downward-sloping straight line.
D)a downward-sloping straight line with slope equal to -1.
E)a downward-sloping curve concave to the origin.

Question

Quizplus · Accepted Answer

A two-for-one tradeoff between the production of snowplows and helicopters means that producing one more snowplow requires giving up the opportunity to produce two helicopters, and vice versa. This implies a constant opportunity cost of producing snowplows in terms of helicopters (and vice versa). The production possibilities boundary between the two goods in this case is a straight line, downward-sloping because of the tradeoff. The slope of the boundary is equal to the negative of the opportunity cost of producing snowplows, which is -2 helicopters per snowplow, or -1/2 helicopters per unit of resources used to produce snowplows. Therefore, the correct choice is C.

Suppose There Are Only Two Goods Produced in Our Economy-Snowplows