Figure 3-1
Peru's Production Possibilities Frontier
-Refer to Figure 3-1.The fact that the line slopes downward reflects the fact that
A)for Peru,it is more costly to produce emeralds than it is to produce rubies.
B)Peru will produce more emeralds and fewer rubies as time goes by.
C)Peru faces a tradeoff between producing emeralds and producing rubies.
D)Peru should specialize in producing rubies.

Question

Figure 3-1
Peru's Production Possibilities Frontier 
-Refer to Figure 3-1.The fact that the line slopes downward reflects the fact that
A)for Peru,it is more costly to produce emeralds than it is to produce rubies. 
B)Peru will produce more emeralds and fewer rubies as time goes by. 
C)Peru faces a tradeoff between producing emeralds and producing rubies. 
D)Peru should specialize in producing rubies.

Quizplus · Accepted Answer

The downward slope of the production possibilities frontier in Figure 3-1 indicates that Peru faces a tradeoff between producing emeralds and producing rubies. Producing more of one good requires sacrificing some of the production of the other good. Therefore, the best choice is C.

Figure 3-1 Peru's Production Possibilities Frontier