When the production possibilities frontier is a straight line, then production occurs under conditions of:
A) increasing costs.
B) decreasing costs.
C) constant costs.
D) increasing, then decreasing, then constant costs.

Question

Quizplus · Accepted Answer

When the production possibilities frontier is a straight line, it indicates that resources are perfectly substitutable for each other and that the production costs remain constant regardless of how much of one good is being produced in relation to the other. Therefore, production occurs under conditions of constant costs.

When the Production Possibilities Frontier Is a Straight Line, Then