Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF)for the accompanying 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 negative slope.

Question

Quizplus · Accepted Answer

The production possibilities frontier (PPF) being a straight line indicates that the opportunity cost of producing one good over another is constant. This is because the slope of a straight line is constant, which in the context of a PPF, means that the rate at which one good can be substituted for another without affecting the total output remains the same at any point along the line.

Which Statement Best Describes the Opportunity Cost Evident in the Production