If the production possibility frontier is a straight line:
A)opportunity costs are constant.
B)the firm faces increasing costs.
C)the firm faces decreasing costs.
D)there is no trade-off between the two goods represented.

Question

Quizplus · Accepted Answer

A straight line PPF indicates that the opportunity cost of producing one good is constant and fixed, regardless of the level of production. This is because resources are perfectly adaptable between the two goods, and the production technology is constant. Therefore, the firm can choose how much of each good to produce based on their relative market prices without facing any trade-off or increasing costs.

If the Production Possibility Frontier Is a Straight Line