If the production possibilities frontier between bottled water and water in a jug is a straight line,which of the following statements would be correct?
A) A large amount of unemployment must exist.
B) Resources are equally productive at producing either product.
C) There is no tradeoff between the two goods.
D) There is no decrease in the production of one good when the production of the other is increased.
E) Producing more of one good gives the economy a free lunch.

Question

Quizplus · Accepted Answer

If the production possibilities frontier between bottled water and water in a jug is a straight line, it implies that resources are equally productive at producing either product. This means that there is no advantage to producing one good over the other, and there is no tradeoff between the two goods since resources can be allocated to either good without sacrificing the production of the other. There is no indication of unemployment, a lack of tradeoffs, or a free lunch in this scenario.

If the Production Possibilities Frontier Between Bottled Water and Water