If the production possibilities curve is a straight line,
A) the two goods will sell at the same market prices.
B) economic resources are perfectly substitutable between the production of the two goods.
C) the two goods are equally important to consumers.
D) equal quantities of the two goods will be produced at each possible point on the curve.

Question

Quizplus · Accepted Answer

A straight line PPC indicates that the opportunity cost of producing one good in terms of the other stays constant, suggesting that the resources used in producing the two goods can be easily reallocated and are therefore perfectly substitutable. Thus, the best choice is B, "economic resources are perfectly substitutable between the production of the two goods."

If the Production Possibilities Curve Is a Straight Line