A production possibilities frontier is a straight line when

a. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good.

b. an economy is interdependent and engaged in trade instead of self-sufficient.

c. the rate of tradeoff between the two goods being produced is constant.

d. the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.

Question

Business

Peter Yang

20 May, 04:53

A production possibilities frontier is a straight line when

a. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good.

b. an economy is interdependent and engaged in trade instead of self-sufficient.

c. the rate of tradeoff between the two goods being produced is constant.

d. the rate of tradeoff between the two goods being produced depends on how much of each good is being produced.

+3

Answers (1)

Know the Answer?

Reagan Olsen · Answer 1

The correct answer is option c.

Explanation:

A production possibilities frontier shows the maximum possible combination of two goods that can be produced using the given resources. The resources are scarce. So in order to increase the production of one good we need to decrease the production of the other.

Because of increasing opportunity cost, the production possibility curve is concave to the origin. When the opportunity cost or the rate of the trade-off between the two goods is constant the production possibility frontier will be a straight line.