Below is a production possibilities curve for a large tract of prairie farm land.

-Refer to the graph above to answer this question.Given the shape of the PP curve,which of the following statements is correct?
A)The law of increasing costs doesn't apply.
B)The resources being used to produce rye and wheat are very similar.
C)The two goods being produced are very similar.
D)Opportunity costs are constant.
E)It is better for the economy to product rye.

Question

Below is a production possibilities curve for a large tract of prairie farm land.
 
-Refer to the graph above to answer this question.Given the shape of the PP curve,which of the following statements is correct?
A)The law of increasing costs doesn't apply. 
B)The resources being used to produce rye and wheat are very similar. 
C)The two goods being produced are very similar. 
D)Opportunity costs are constant. 
E)It is better for the economy to product rye.

Quizplus · Accepted Answer

The PP curve is linear, which means that the opportunity cost of producing one good in terms of the other is constant. This means that the law of increasing costs does not apply.

Below Is a Production Possibilities Curve for a Large Tract