Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. If additional units of output could be produced at constant opportunity cost, the production possibilities curve would be: a positively sloped with a concave curvature. c. increasing costs. A) resources are highly specialized, making it difficult to use them for alternative uses. Explanation - Opportunity cost -Opportunity cost refers to what you have to giv view the full answer. But if you want to produce another unit, you have to give up more Y. ... A point inside of the production possibilities curve is inefficient because it is possible to produce more of one or … Why is the production possibilities frontier (PPF) typically bowed-outward? there will be a basis for mutually advantageous trade provided the slopes differ. Below is an example of the trade-off between investing people in high tech industries versus entertainment industries. For the first question, the answer is D. The PPC represents what the economy could produce if there is full employment (i.e., if all resources are being used efficiently and to their full extent). Increasing opportunity cost. Since labor is a resource, unemployment means that labor is not being used to its fullest extent, so the economy can't produce as much as the points on the PPC--instead it has to produce some smaller amount of stuff in general, which is represented by a point inside the curve. constant costs. D. is illustrated by a point inside the production possibilities curve. If the Production Possibilities Curve for a Market is a straight line instead of curved/bowed out, then how are the supply and demand curves … Outside the PPF curve is impossible. A. causes the production possibilities curve to shift outward. … The PPF is called a frontier or a boundary line because any point on the curve represents full employment of resources. For the best answers, search on this site https://shorturl.im/QZMNZ. The slope shows the reduction required in one commodity in order to increase the output of the second commodity. 30 Food and 30 WMD. B. economic resources are perfectly substitutable between the production of the two products. If every trade-off were the same, it would create a straight line. A production possibilities curve that is a straight line represents the case of. MEDIUM. If the production possibilities curve is a downward-sloping straight line, that would indicate? Get step-by-step explanations, verified by experts. The Output Combinations Along The Curve Provide Equal Levels Of Satisfaction To Consumers. View Answer. A vertical merger is the combination of two or more firms involved in different stages of producing the same good or service. If the production possibilities curve is a straight line, then the, A. opportunity cost of producing one good, C. producer can produce more of both goods, D. society is capable of producing only one of the goods and not, 80. Production Possibility Curve (PPC) will be a straight line when _____. Definition: The Production Possibilities Curve, also known as the production possibilities frontier, is a graph that shows the maximum number of possible units a company can produce if it only produces two products using all of its resources efficiently. The PPC would be a straight line with equal Y and X. i.e. A production possibility curve measures the maximum output of two goods using a fixed amount of input. D)is a wavy line. The Opportunity Cost Of Production Of The Good On The Y-axis Increases As You Move Down Along The Curve. The money market model. A. causes the production possibilities curve to shift outward. It's impossible to draw a straight line through those 3 points. This is the currently selected item. ------------------------------------------------------------------------------------------------. For example if the curve is a straight line, it means the for every unit of good y relinquished, an additional unit of good x can be produced. Its always drawn as a curve and not a straight line because there a cost involved in making a choice i.e when the quantity of one good produced is higher and the quantity of the other is low. The Production Possibilities Curve: Assumption, Uses or Application! C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. D) In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced. See the answer. A production possibilities curve that is a straight line represents the case of. Every graph used in AP Macroeconomics. In this diagram AF is the production possibility curve, also called or the production possibility frontier, which shows the various combinations of the two goods which the economy can produce with a … For example, production could take place at point D, with 9 million units of food and 3 million units of cloth being produced. Answers A and C don't even relate to anything that the PPC can tell you, and answer D is just plain wrong; there's only one point on the PPC where you'll have equal quantities of the goods. A point or combination that is on the production possibilities curve is, A point outside (to the right of) the production possibilities curve is. In contrast, the PPF has a curved shape because of the law of the diminishing returns. -----If the production possibilities curve is a straight line: A PPF that is concave (far left box) indicates increasing opportunity costs. View Answer. Production Possibility Curve: Production possibility curve, graphically, represents various combinations of two goods that can be produced with, with given resources. Join Yahoo Answers and get 100 points today. Bernie’s PPF is a straight line, meaning that his resources are equally suited for either sweeping or scrubbing. constant costs. Increasing opportunity costs mean that not all resources are equally suited for the production of both goods. Don’t savings increase when interest rate is higher? If the production possibilities curve was a straight line, this would imply that A) Economic resources are perfectly substitutable, in the production of the two products B) Equal quantities of both products are produced at each possible point on the curve Production Possibility Curve (PPC) is simply another term used to refer to this. The straight-line production possibilities curve introduced in the text) is not subject to increasing opportunity costs. a. decreasing costs. Answer. Here, it looks like it's bowed out from the origin, it looks like it's popping out in that direction. This preview shows page 40 - 54 out of 261 pages. Why is everyone but us so underdeveloped? This is the currently selected item. The curve is a downward-sloping straight line, indicating that there is a linear, negative relationship between the production of the two goods. For example, production is not possible at point U. b. experience an increase in its resources and/or an improvement in its technology. The production possibilities frontier (PPF) is curved because the cost of production is not constant. You can sign in to vote the answer. Well, if you start out at the point where you're ONLY producing good Y, and you want to produce one unit of good X, you'll see that you only have to sacrifice a little bit of Y to get that one unit of X. This problem has been solved! The production possibilities curve model. The … The following diagram (21.2) illustrates the production possibilities set out in the above table. C) the two products are equally important to consumers. But if the PPC is a straight line, the amount of Y you have to give up to make one more X is the same everywhere, and the amount of X you have to give up to make one more Y is the same everywhere as well. Other terms used in the same way are Production Possibility Boundary and transformation curve. C) 45-degree line starting at the origin. Greater resource availability. Production Possibilities Curve 2 5. B. economic resources are perfectly substitutable between the production of the two products. combination A dependant on D. Technology is a sought after commodity. According to the graph above, the opportunity cost of producing 100 additional shell necklaces is 79. There are two major differences between a budget constraint and a production possibilities frontier. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope. Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. C. producer can produce more of both goods simultaneously. A concave curve … Customize assignments and download PDF’s. Greater resource availability. If the production possibilities curve was a straight line, this would imply that March 4, 2020 by Rimpa A) Economic resources are perfectly substitutable, in the production of the two products Moreover, as you might have already guessed, the slope of a straight-line production possibilities curve is equal to the opportunity cost—specifically, the opportunity cost … a. positively sloped straight line b. negatively sloped curve bowed in toward the origin B. law of constant opportunity costs applies. The PPF curve can be for a single company or producer, or for the economy as a whole. If not, why not? Question: What Does A Straight-line Production Possibilities Curve Illustrate? Everywhere else you'll have something like 9 X and 3 Y or 4 X and 8 Y. ANS: The PPF is typically bowed-outward due to the law of increasing opportunity costs. Get your answers by asking now. So the first thing I'm going to do is ask you a question. C. the two goods are equally important to consumers. But the direction that PPF is curved comes from the way that the trade-offs change. Create custom Assignments. B. economic resources are perfectly substitutable between the production of the two goods. D. society is capable of producing only one of the goods and not the other. Here is a guide to graphing a PPF and how to analyze it. Production Possibilities Frontier Graph Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. B) economic resources are perfectly shiftable between the production of the two products. C. the two products are equally important to consumers. a. that society cannot decide which good it prefers b. an absence of scarcity PPFs are normally drawn as bulging upwards or outwards from the origin, but they can be represented as bulging downward or linear, depending on a number of assumptions. C. is illustrated by a point outside the production possibilities curve. Why is S a straight line? Draw Farmer Brown's production possibilities frontier (PPF), corn on horizontal axis and tobacco on vertical … e … . D. equal quantities of the two products will be produced at each possible point on the curve. Dave's opportunity cost of producing 1 pound of green beans is ______ pound(s) of, Dave's opportunity cost of producing 1 pound of corn is ______ pound(s) of green, Jane's opportunity cost of producing 1 pound of green beans is ______ pound(s) of, Jane's opportunity cost of producing 1 pound of corn is ______ pound(s) of green, Jorge's opportunity cost of producing 1 pound of green beans is ______ pound(s) of. Such a shift reflects, for instance, economic growth of an economy already operating at its full productivity, which means that mor Econ101 Fall 2017_Midterm1_VersionsAandB_Answer Key.pdf, University of Nebraska, Lincoln • ECON 212, Northern Virginia Community College • ECON 201, California State University Los Angeles • ECON 2200. Sort by: Top Voted. B. can exist at any point on a production possibilities curve. 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