Use the following to answer question:

-(Figure: Guns and Butter)Use Figure: Guns and Butter.This production possibility frontier is:
A)bowed out because of increasing opportunity costs.
B)bowed in because of increasing opportunity costs.
C)bowed in because of constant costs of guns and butter.
D)linear because of constant costs.

Question

Use the following to answer question:

-(Figure: Guns and Butter)Use Figure: Guns and Butter.This production possibility frontier is:
A)bowed out because of increasing opportunity costs. 
B)bowed in because of increasing opportunity costs. 
C)bowed in because of constant costs of guns and butter. 
D)linear because of constant costs.

Quizplus · Accepted Answer

The PPF is bowed out, indicating increasing opportunity costs. This means that in order to produce more of one good, society must give up increasing amounts of the other good. The best choice would be somewhere along the PPF, depending on societal preferences.

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