A production possibilities curve that is linear (a straight line):
A)illustrates a tradeoff in which opportunity cost of a good increases with the level of its production.
B)illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production.
C)illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production.
D)demonstrates the fallacy of composition.

Question

A production possibilities curve that is linear (a straight line):
A)​illustrates a tradeoff in which opportunity cost of a good increases with the level of its production.
B)​illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production.
C)​illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production.
D)​demonstrates the fallacy of composition.

Quizplus · Accepted Answer

A linear production possibilities curve shows a constant opportunity cost of producing one good in terms of the other good. This means that as the production of one good increases, the same amount of the other good must be given up. There is no increase or decrease in the opportunity cost.

A Production Possibilities Curve That Is Linear (A Straight Line)