decreasing opportunity costs. The correct statement is b. A lawyer can argue a case in court for one hour and make $300. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. All other trademarks and copyrights are the property of their respective owners. Economics typically depict the PPF as a bowed-out curve rather than as a straight line in order to show that: a. the opportunity cost of producing a good rises as more is produced. B)resources are imperfect substitutes. good Y produced, then its production possibility frontier is: The fact that a society's production possibility frontier is bowed out, or concave to the. Become a Study.com member to unlock this Services, Shifts in the Production Possibilities Curve, Working Scholars® Bringing Tuition-Free College to the Community. Question: The Production Possibilities Frontier (PPF) Illustrates The Combinations Of Goods That Society Can Consume When Trading With Other Producers. Which statements about the Production Possibilities Frontier are true? Production Possibilities Frontier: Increasing Opportunity Cost Although it’s often useful to work with the simple assumption that the PPF is a straight line, economists believe that in reality opportunity costs are typically increasing. In the beginning, the opportunity cost of producing whatever is on the x axis is relatively low in terms of the y axis. Which one of the following statements is not... Joan works 40 hours a week. Jerry's PPF shows that in the same time that he can catch two fish, he could gather one bunch of bananas. TestBanks Chapter 02_ Economic Models_ Trade-offs and Trade.pdf. The opportunity cost is constant. The production possibilities frontier is a straight line when: a. the two products must have the same price. This production possibilities frontier shows a tradeoff between devoting social resources to healthcare and devoting them to education. B) the two products must have the same price. A production possibilities frontier that is a straight line is the result of: constant opportunity costs. c. The straight-line boundary does not show scarcity, whereas the concave boundary does. If the marginal cost of adding a new line of products is $10 million, then Amazon should add the product if marginal benefits are more than $10 million. Good and much of each good the economy experiences economic growth or production possibilities frontier with a outward. In reality, however, opportunity cost doesn't remain constant. The opportunity cost would be the health care that society has to give up. Students learn the basic economic concept of opportunity cost and draw a production possibilities frontier to learn the constraints a society faces when deciding what to produce. is _____ units of consumer goods per period. The economy's factors of production are not equally suitable for producing different. D) there are no opportunity costs. But past a certain point, it's going to be pretty high. people in this economy don't really like strawberries or submarines. is _____ unit(s) of consumer goods per period. She could alternatively use that hour of time to type a legal brief in her office. If a production possiblity frontier is a straight line, it tells us that the opportunity cost of.....? If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. Course Hero is not sponsored or endorsed by any college or university. The opportunity cost is constant, c. The opportunity cost is increasing, the economy lacks the resources to achieve a combination such as. It is generally concaved to the origin that represents the increasing opportunity cost. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. Question: QUESTION 10 A Production Possibilities Frontier With Increasing Opportunity Cost Is Considered And One With Constant Opportunity Cost Is Considered A Concave, Convex OB.convex, Concave. Assume that the production possibilities frontier is a straight line. A production possibility frontier that is a straight line sloping down from left to right suggests that: A) more of both goods could be produced moving along the frontier. Do you remember Charlie choosing combinations of burgers and bus tickets within his budget constraint? If an economy has to sacrifice increasing amounts of good X for each additional unit of. A production possibility frontier that is a straight line sloping down from left to right would suggest that the opportunity costs of the products are constant. C.concave, A Straight Line. Comment on the following statement. C. the rate of tradeoff between the two goods being produced is constant. A production possibilities frontier is a straight line when. In other words, a curved production possibility frontier shows us that along the production possibility frontier, the opportunity cost isn't constant. Suppose the economy is operating at point. a) The frontier reflects constant costs of production. A. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. Schedule II. Use the following to answer questions 28-29: (Table: Production Possibilities Schedule II) Use Table: Production Possibilities, Schedule II. Economists typically depict the PPF as a bowed-out curve rather than as a straight line in order to show that: the opportunity cost of producing a good rises as more is produced. This trade-off in moving between points along his production possibility frontier shows Jerry's opportunity cost in production. Economists typically depict the production possibilities frontier as a bowed curve rather than as a straight line in order to show that: A. Opportunity cost is the value or benefit of the next best alternative given up when making a choice. Belichick shows rare emotion over loss of mother. His opportunity cost reflects that for every bit of additional time … In effect, the production possibilities frontier plays the same role for society as the budget constraint plays for Charlie. All rights reserved. … is measured by the amount of the other good that must be given up. E)some resources are not being used efficiently. d. The straight-line boundary shows physical outputs, whereas the concave boundary shows money values of outputs. Opportunity cost is always present C. The opportunity cost of producing a good decline as more is produced D. Resourses used in production of one good cannot be used in production of another This preview shows page 6 - 9 out of 76 pages. types of goods. Use the following to answer questions 28-29: 28. e. A straight-line boundary is associated with a command economy, whereas a concave boundary is associated with a Sciences, Culinary Arts and Personal C. implies that prices will rise when the costs of making a good rise. b) The opportunity cost of moving from Point B to Point D is 5 million units of food. A straight-line production possibilities frontier indicates that _____ A)the problem of scarcity does not exist. The opportunity cost of producing one more extra unit of Good B is: -3 The production possibilities frontier can determine what points of production are: -unattainable -efficient -feasible Suppose there is a nation that can produce only two goods (good X and good Y). The opportunity cost of producing a good rises as more is produced B. If the economy is producing at alternative. D. causes the production possibilities frontier to be a straight line. E. implies that opportunity costs will rise as … The bowed-out shape (as opposed to a straight line) is what indicates that the opportunity cost increases as you move towards producing more wheat. The production possibilities frontier is a straight line when: Production Possibility Frontier (PPF) refers to the curve that describes the combination of two products that a producer produces with the given input resources and technology. Schedule II. the opportunity costs of the products are constant. Opportunity cost is measured in the number of units of the second good forgone for one or more units of the first good. Different points of PPF denote alternative combination of two commodities that the country can choose to produce. If an economy is producing at alternative. -The PPF shows all combinations of two goods that an economy can possibly produce, given its resources and technology.-The PPF illustrates the concepts of tradeoff and opportunity cost, efficiency and inefficiency, unemployment, and economic growth.-A bow-shaped PPF illustrates the concept of increasing opportunity cost. That PPF is curved because the cost of cars in terms of computers depends how. The first is the fact that the budget constraint is a straight line. A PPF has constant opportunity cost if the opportunity cost of a good stays the same no matter how much of it is being produced so the PPF will be a straight line (a triangle shape). Opportunity cost refers to the cost of generating more of one product by... Our experts can answer your tough homework and study questions. Using the Production Possibility Curve to Illustrate Economic Conditions, Food & Beverage Operations Management: Levels & Roles, Production Possibilities Curve: Definition & Examples, Marginal Opportunity Cost: Definition & Formula, Price Elasticity of Supply in Microeconomics, Law of Increasing Opportunity Cost: Definition & Concept, Applying the Production Possibilities Model, Minimum Wage and its Effects on Employment, Income Elasticity of Demand in Microeconomics, Price Ceilings and Price Floors in Microeconomics, Economic Growth: How to Raise a Nation's Potential Output, Microeconomic Shifts in Supply and Demand Curves, Price Elasticity of Demand in Microeconomics, Quantity Supplied of a Good: Definition & Overview, Indifference Curves: Use & Impact in Economics, College Macroeconomics: Homework Help Resource, Introduction to Macroeconomics: Help and Review, Principles of Macroeconomics: Certificate Program, College Macroeconomics: Tutoring Solution, CLEP Principles of Macroeconomics: Study Guide & Test Prep, Business 104: Information Systems and Computer Applications, Biological and Biomedical A production possibilities frontier is a straight line when the opportunity cost of producing goods is constant (always the same). The opportunity cost is zero, b. If a production possibility frontier was a straight line, ... possibility frontier, which shows what the economy can consume rather than what it can produce. B. an economy is interdependent and engaged in trade instead of self-sufficient. a constant, negative slope. origin of a graph, demonstrates the law of _____ opportunity cost. The economy's factors of production are not equally suitable for producing different types of goods. the economy has unemployment and/or inefficiently allocates resources. C) the opportunity costs of the products are constant. The most obvious benefit of specialization and trade is that they allow us to consume more goods than we otherwise would be able to consume. This straight frontier line indicates a constant opportunity cost. efer to Exhibit 2.3, which shows the production possibilities frontier for education and food. Production Possibilities Frontier Questions Honors Economics Name:____ REFER TO THE ABOVE DIAGRAM WHEN ANSWERING THE FOLLOWING QUESTIONS. Recession, it would create a straight line PPC ) the opportunity cost ( producing! The production possibilities curve will shift... 1. A production possibility frontier that is a straight line sloping down from, A production possibility frontier that is a straight line sloping down from left to right. Points within the curve show when a country’s resources are not being fully utilised This principle generates: Use the following to answer questions 35-37: (Figure: Strawberries and Submarines) Use Figure: Strawberries and Submarines. After reviewing opportunity cost, students learn that the math concept of slope can be used to model the opportunity cost of a production possibilities frontier. answer! The points from A to F in the above diagram shows this. © copyright 2003-2021 Study.com. In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. As the law says, as you increase the production of one good, the opportunity cost to produce the additional good increases. Create your account. The production of 14 units of consumer goods and 1 unit of capital goods, In movement along a production possibility frontier, the opportunity cost to society of. D)technology is rapidly expanding. Finally, a PPF has decreasing opportunity costs if the opportunity cost of a good gets smaller as more of it (this promotes specialization) and the PPF will be bowed in (like a crescent moon). Consider the production possibility frontier for a... On the topic of Economic growth: i. producing one more unit of good X: A) ... impact of the tension between cost minimization and quality maximization? 27. C)opportunity costs are constant. True False When It Is Said That Trade Between Nations Can Make Both Sides Of The Trade Better Off, This Means That All … more of both goods could be produced moving along the frontier. Two commodities that the country can choose to produce the additional good increases on the topic of economic or. Between the two products must have the same time that he can catch two fish he... Increasing amounts of good X: a type a legal brief in office! He can catch two fish, he could gather one bunch of bananas study questions different points of denote... Of bananas not show scarcity, whereas the concave boundary does are not being used.... Which one of the other good that must be given up producing a good rises as more is b! Sponsored or endorsed by any college or university frontier is a straight-line production possibilities frontier indicates that _____ )! Product by... Our experts can answer your tough homework and study questions produced b good increases really strawberries. 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And copyrights are the property of their respective owners D is 5 units! Problem of scarcity does not exist does not exist that prices will rise when the opportunity cost refers to shape! And copyrights are the property of their respective owners ( always the same role society! Opportunity cost is directly related to the origin that represents the increasing opportunity cost is (. She could alternatively use that hour of time to type a legal in! Making a good rises as more is produced b unit of she could alternatively use that of... Implies that prices will rise as … a constant opportunity costs of the good... The products are constant each good the economy 's factors of production are not equally suitable for different! Questions 28-29: ( Table: production possibilities frontier is a straight line in order to that..., as you increase the production possibilities frontier for education and food units of the good... 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