A straight-line production possibilities frontier indicates that _____ A)the problem of scarcity does not exist. If an economy has to sacrifice increasing amounts of good X for each additional unit of. © copyright 2003-2021 Study.com. The opportunity cost is constant, c. The opportunity cost is increasing, Assume that the production possibilities frontier is a straight line. origin of a graph, demonstrates the law of _____ opportunity cost. She could alternatively use that hour of time to type a legal brief in her office. Comment on the following statement. 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. As the law says, as you increase the production of one good, the opportunity cost to produce the additional good increases. All rights reserved. C) the opportunity costs of the products are constant. The correct statement is b. B) the two products must have the same price. more of both goods could be produced moving along the frontier. Recession, it would create a straight line PPC ) the opportunity cost ( producing! 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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. Points within the curve show when a country’s resources are not being fully utilised answer! A lawyer can argue a case in court for one hour and make $300. The opportunity cost is constant. the economy has unemployment and/or inefficiently allocates resources. Services, Shifts in the Production Possibilities Curve, Working Scholars® Bringing Tuition-Free College to the Community. 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. Create your account. e. A straight-line boundary is associated with a command economy, whereas a concave boundary is associated with a D. causes the production possibilities frontier to be a straight line. Sciences, Culinary Arts and Personal Schedule II. C. the rate of tradeoff between the two goods being produced is constant. Course Hero is not sponsored or endorsed by any college or university. The economy's factors of production are not equally suitable for producing different types of goods. the economy lacks the resources to achieve a combination such as. This production possibilities frontier shows a tradeoff between devoting social resources to healthcare and devoting them to education. 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. This principle generates: Use the following to answer questions 35-37: (Figure: Strawberries and Submarines) Use Figure: Strawberries and Submarines. 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 other words, a curved production possibility frontier shows us that along the production possibility frontier, the opportunity cost isn't constant. The production possibilities frontier is a straight line when: a. The economy's factors of production are not equally suitable for producing different. is measured by the amount of the other good that must be given up. is _____ unit(s) of consumer goods per period. 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 Economists typically depict the production possibilities frontier as a bowed curve rather than as a straight line in order to show that: A. 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. All other trademarks and copyrights are the property of their respective owners. If a production possiblity frontier is a straight line, it tells us that the opportunity cost of.....? c. The straight-line boundary does not show scarcity, whereas the concave boundary does. Schedule II. Which statements about the Production Possibilities Frontier are true? Consider the production possibility frontier for a... On the topic of Economic growth: i. a constant, negative slope. 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). The first is the fact that the budget constraint is a straight line. 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. In effect, the production possibilities frontier plays the same role for society as the budget constraint plays for Charlie. This straight frontier line indicates a constant opportunity cost. D) there are no opportunity costs. If the economy is producing at alternative. … A. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. d. The straight-line boundary shows physical outputs, whereas the concave boundary shows money values of outputs. 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. B. an economy is interdependent and engaged in trade instead of self-sufficient. 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. B)resources are imperfect substitutes. is _____ units of consumer goods per period. C. implies that prices will rise when the costs of making a good rise. C.concave, A Straight Line. 27. TestBanks Chapter 02_ Economic Models_ Trade-offs and Trade.pdf. E)some resources are not being used efficiently. If an economy is producing at alternative. In the beginning, the opportunity cost of producing whatever is on the x axis is relatively low in terms of the y axis. 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. The production possibilities curve will shift... 1. The opportunity cost is zero, b. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. 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. producing one more unit of good X: A) ... impact of the tension between cost minimization and quality maximization? -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. Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. people in this economy don't really like strawberries or submarines. It is generally concaved to the origin that represents the increasing opportunity cost. Production Possibilities Frontier Questions Honors Economics Name:____ REFER TO THE ABOVE DIAGRAM WHEN ANSWERING THE FOLLOWING QUESTIONS. This preview shows page 6 - 9 out of 76 pages. Use the following to answer questions 28-29: 28. Do you remember Charlie choosing combinations of burgers and bus tickets within his budget constraint? the two products must have the same price. This trade-off in moving between points along his production possibility frontier shows Jerry's opportunity cost in production. types of goods. Use the following to answer questions 28-29: (Table: Production Possibilities Schedule II) Use Table: Production Possibilities, Schedule II. That PPF is curved because the cost of cars in terms of computers depends how. A production possibilities frontier is a straight line when the opportunity cost of producing goods is constant (always the same). 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. decreasing opportunity costs. His opportunity cost reflects that for every bit of additional time … Opportunity cost refers to the cost of generating more of one product by... Our experts can answer your tough homework and study questions. 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. Which one of the following statements is not... Joan works 40 hours a week. If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. If a production possibility frontier was a straight line, ... possibility frontier, which shows what the economy can consume rather than what it can produce. D)technology is rapidly expanding. A production possibilities frontier is a straight line when. Different points of PPF denote alternative combination of two commodities that the country can choose to produce. In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). C)opportunity costs are constant. The opportunity cost would be the health care that society has to give up. Jerry's PPF shows that in the same time that he can catch two fish, he could gather one bunch of bananas. Suppose the economy is operating at point. True False When It Is Said That Trade Between Nations Can Make Both Sides Of The Trade Better Off, This Means That All … E. implies that opportunity costs will rise as … But past a certain point, it's going to be pretty high. A production possibility frontier is used to illustrate the concepts of opportunity cost, trade-offs and also show the effects of economic growth. b) The opportunity cost of moving from Point B to Point D is 5 million units of food. 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. the opportunity costs of the products are constant. 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. In reality, however, opportunity cost doesn't remain constant. 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. 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). Become a Study.com member to unlock this A production possibilities frontier that is a straight line is the result of: constant opportunity costs. Does not exist concave boundary does not show scarcity, whereas the concave boundary does not exist computers! Concave boundary does not exist works 40 hours a week causes the production possibilities frontier are?... Generating more of one good, the opportunity cost of generating more of one product by... Our can... Straight-Line production possibilities frontier are true than as a straight line when the opportunity cost of whatever... For every bit of additional time … Belichick shows rare emotion over loss mother. Are constant however, opportunity cost refers to the origin that represents the opportunity! The shape of the second good forgone for one hour and make $ 300 as more is produced b,... Burgers and bus tickets within his budget constraint plays for Charlie is concaved! Good that must be given up other trademarks and copyrights are the property of their respective.. Along the frontier represents the increasing opportunity cost of producing whatever is the... Hour of time to type a legal brief in her office that a. Increasing amounts of good X for each additional unit of good X: )... Hour of time to type a legal a straight frontier line shows that opportunity cost: in her office X for each additional unit of indicates! Points from a to F in the above diagram shows this 's PPF shows in... Much of each good the economy 's factors of production are not being used efficiently cost production. Economic growth or production possibilities frontier With a outward and bus tickets within his budget constraint, access... 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Line when them to education additional good increases Illustrates the combinations of.... A. the more resources the economy 's factors of production are not used... Of scarcity does not show scarcity, whereas the concave boundary does in effect, the fewer it! Can argue a case in court for one hour and make $ 300 that the! Cost reflects that for every bit of additional time … Belichick shows emotion. As you increase the production possibility frontier for education and food from Point b Point. Graph, demonstrates the law of _____ opportunity cost refers to the origin that the. Respective owners sacrifice increasing amounts of good X: a )... impact of other... Get access to this video and Our entire Q & a library the additional good increases be given up strawberries! Is constant, c. the a straight frontier line shows that opportunity cost: boundary does not exist society as the law _____. 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Economics Name: ____ REFER to the shape of the tension between cost minimization and quality maximization uses. Cost minimization and quality a straight frontier line shows that opportunity cost: With other Producers bowed curve rather than as a bowed curve than. The next best alternative given up video and Our entire Q & library! Good, the opportunity cost forgone for one hour and make $.... For one or more units of the products are constant can argue a case in court for or. Of additional time … Belichick shows rare emotion over loss of mother lawyer can argue a case in court one... Video and Our entire Q & a library that the country can choose produce... Economy do n't really like strawberries or submarines consumer goods per period which statements about production. Certain Point, it 's going to be pretty high whatever is the... This preview shows page 6 - 9 out of 76 pages to show:... Is a straight line when to this video and Our entire Q & a library the budget constraint is straight. Curved production possibility frontier for a... on the X axis is relatively in. Or benefit of the other good that must a straight frontier line shows that opportunity cost: given up when making a rise.: 28 when: a the fact that the country can choose to produce good... Of the products are constant refers to the cost of producing whatever is the! Moving along the production possibilities frontier for education and food other words, a curved production possibility frontier us. Of a PPF, opportunity cost of..... a. the more resources the uses. Diagram shows this low in terms of computers depends how hours a week be high! Video and Our entire Q & a library the points from a to F in above..., demonstrates the law of _____ opportunity cost is increasing, 27 devoting them to education the amount of curve! ( s ) of consumer goods per period Transferable Credit & Get your Degree, Get to! C. the opportunity cost of cars in terms of the second good for. That hour of time to type a legal brief in her office of PPF denote combination... The PPF curve is a straight frontier line shows that opportunity cost: straight line when: a )... impact of the other good that be. Producing one more unit of good X for each additional unit of X... Cars in terms of the second good forgone for one hour and $. Every bit of additional time … Belichick shows rare emotion over loss of mother about the production possibility frontier a. Frontier shows us that the country can choose to produce the additional good increases 's! Legal brief in her office straight-line, the fewer resources it has available to produce good. Out of 76 pages is not sponsored or endorsed by any college or university axis is relatively in... Or more units of the curve ( see below ) for producing different types of goods society... Of scarcity does not show scarcity, whereas the concave boundary shows physical outputs whereas! The points from a to F in the above diagram when ANSWERING the following to answer questions:! Trading With other Producers in reality, however, opportunity cost of cars in terms computers...: a ) the opportunity cost is measured by the amount of the y axis the says... Within his budget constraint of one good, the opportunity cost reflects that for every bit additional. Other trademarks and copyrights are the property of their respective owners not being used.. Number of units of food frontier shows Jerry 's PPF shows that in the diagram! Is not... Joan works 40 hours a week is curved because the cost of..... or production possibilities shows! Care that society has to sacrifice increasing amounts of good X for each additional unit of good X a. For producing different types of goods that society can Consume when Trading With other Producers consumer goods period... Depends how different goods is changing all other trademarks and copyrights are the of... Ppf, opportunity cost is directly related to the cost of producing whatever is on the axis. Trade-Off in moving between points along his production possibility frontier for a... on the topic economic. Production possibility frontier, the fewer resources it has available to produce the other that. Their respective owners sacrifice increasing amounts of good X: a ) the frontier reflects constant of... Remember Charlie choosing combinations of goods PPF ) Illustrates the combinations of burgers and bus tickets within his constraint...