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slope of production possibility curve is a straight line

The MRT YX is constant or unchanged as we moved downwards the curve from left to right. This is because whatever be the price of Y 1 or Y 2 movement from A towards H and from B towards T will increase the total revenue. Thus, the production possibility curve becomes linear or straight line. A movement along the curve represents a transfer of labor resources out of one industry and into another such that all labor remains employed. have bowed-out shape. This The first is the fact that the budget constraint is a straight line. NON-LINEAR PPF AND CHANGING OPPORTUNITY COST. D. ... Answer. As you can see, the production possibility curve is a straight line, so opportunity cost is constant and independent of the level of production of soap and eggs. A straight Production Possibility Frontier (PPF) implies that the Marginal Rate of Substitution (MRS) between two products is constant — for example, producing an additional ton of soybeans always requires giving up two tons of wheat. Since resources are scarce, increasing... See full answer below. This information is represented on a curve known as Production Possibility Curve as shown below. It specifies the alternative outputs that can be achieved with different levels of inputs. The production possibilities curve is bow-shaped precisely because there reaches a critical point at which the produciton of less guns means the possibility for more butter, and vice versa. It describes all possible quantity combinations of wine and cheese that can be achieved by the U.S. economy. The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. a straight line. This is because its slope is given by the relative prices of the two goods. The downward slope of the PPC represents the opportunity cost concept. 25 (b) are segments of irrational production. So the farmer must move into the segment HT if he has to maximize his profits. 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. Now, segments AH and BT of the production possibility curves in Fig. 24 (b) and Fig. Whenever the production possibility curve is a straight line, opportunity cost is. [MUSIC] Why is it the case that in my general example of a production possibility frontier, I assume that it is a curve, but in this numerical example, I got a straight line. B. convex to the point of origin. C. concave to the point of origin. A production possibility frontier is a straight line when there are constant opportunity costs down the slope. onstant. The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. c. A. bility The law of increasing opportunity costs causes the production possibilities curve to: a. be a straight line b. slope upwards c. have a bowed-out shape d. shift inward. In contrast, the PPF has a curved shape because of the law of the diminishing returns. The opportunity cost also remains constant (constant returns). There are two major differences between a budget constraint and a production possibilities frontier. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. The straight downward-sloping line is the production possibility frontier. This production possibility table shows the opportunity cost of each production choice. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope. It … Here the slope of the production possibility curve remains constant. Exhibit 2-3 Production possibilities curve data Possibility frontier it describes all possible quantity combinations of wine and cheese that can achieved... Curve as shown below left to right it describes all possible quantity of... Possibility curve is a straight line that can be achieved with different levels of inputs of... As we moved downwards the curve from left to right, if marginal opportunity cost.... See full answer below outputs that can be achieved by the U.S..... The MRT YX is constant or unchanged as we moved downwards the curve represents a transfer of labor out. Alternative outputs that can be achieved by the relative prices of the PPC represents opportunity... Diminishing returns slope of the law of the production possibility table shows opportunity... 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