Suppose someone finds a production possibilities frontier (PPF)that is shaped like a straight line.What can one determine about the production of the two goods?
A) Production of the two goods is subject to decreasing relative cost.
B) Production of the two goods is subject to increasing relative cost.
C) Production of the two goods is subject to constant opportunity cost anywhere along the PPF.
D) One producer must have an absolute advantage in production.
E) More resources will not cause the PPF to shift.

Question

Quizplus · Accepted Answer

A straight line PPF indicates that the opportunity cost of producing one good in terms of the other is constant, meaning that it takes the same amount of resources to produce each additional unit of either good. Therefore, production of the two goods is subject to constant opportunity cost anywhere along the PPF.

Suppose Someone Finds a Production Possibilities Frontier (PPF)that Is Shaped