Don’t savings increase when interest rate is higher? The reason for these straight lines was that the slope of the budget constraint was determined by relative prices of the two goods in the consumption budget constraint. b. bowed outward away from the origin. The Output Combinations Along The Curve Provide Equal Levels Of Satisfaction To Consumers. ELI5:Why is a production possibility frontier displayed as a curve, rather than a straight line? B. can exist at any point on a production possibilities curve. Comparative advantage and the terms of trade . The PPF is called a frontier or a boundary line because any point on the curve represents full employment of resources. Greater resource availability. 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. there will be a basis for mutually advantageous trade provided the slopes differ. If a production possibility curve is a straight line, it tells us that the opportunity cost of producing one more unit of good X: a. is an increasing amount of good Y. b. is equal to one more unit of Y. VIEW MORE. A. causes the production possibilities curve to shift outward. D. equal quantities of the two products will be produced at each possible point on the curve. You keep giving up more Y for the same increase in X as you go down the curve, because at the beginning you're reassigning resources that are the best at producing X first, then as you move down the resources that are still being used for Y become progressively less useful for producing X, so it takes more of them to make more X, meaning that you'll lose more and more production of Y per unit of X when you move down the curve. 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. And here, it looks like it's bowed in to the origin, it's popping in in this direction. View Answer. The market model. Everywhere else you'll have something like 9 X and 3 Y or 4 X and 8 Y. Production points inside the curve show an economy is not producing at its comparative advantage. The slope shows the reduction required in one commodity in order to increase the output of the second commodity. If opportunity costs are constant, the production possibilities frontier is graphed as a _____. When The Possibility Curve Is A Straight Line Does The Order Of Which Fields Brown Is Switching Matter? ? If the production possibilities curve is a straight diagonal line, then economists say that D. there are constant opportunity costs. B)is a straight line. The first is the fact that the budget constraint is a straight line. D. is illustrated by a point inside the production possibilities curve. If the production possibilities curve is a straight line then the A opportunity, 17 out of 23 people found this document helpful, 79. Why is this the case? 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 … AACSB: Reflective Thinking Blooms: Apply Difficulty: 2 Medium Learning Objective: 35-01 What comparative advantage is. However, the production possibilities frontier for healthcare and education was drawn as a curved line. The production possibilities curve model. 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 Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. Email. b. constant opportunity costs but decreasing real costs. 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 … Question 35. Economics In Economics, I'd expect a PPF graph to be a straight line between using all resources to produce Product Y and all resources being used to produce product X. B) technological change has increased. A. causes the production possibilities curve to shift outward. Here, our production possibility curve, or our PPC, it looks like a straight line. The Opportunity Cost Of Production Does NOT Vary Along The Curve. The input is any combination of the four factors of production: natural resources (including land), labor, capital goods, and entrepreneurship.The manufacturing of most goods requires a … For the second question, the answer is B. A production possibilities curve that is a straight line represents the case of. E)has an unpredictable shape. According to the graph above, the opportunity cost of producing 100 additional shell necklaces is C)is "bowed outward." A PPF that is concave (far left box) indicates increasing opportunity costs. Practice: Interpreting graphs of the production possibilities curve (PPC) Practice: Calculating opportunity costs from a production possibilities curve (PPC) Next lesson. A production possibility curve measures the maximum output of two goods using a fixed amount of input. 31. Use the following table to answer the question below. Here is a guide to graphing a PPF and how to analyze it. Do you think the President plays any role in the economic status of our country? asked Jul 13, 2016 in Economics by Plotintro. 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. A. causes the production possibilities curve to shift outward. b. experience an increase in its resources and/or an improvement in its technology. C. the two goods are equally important to consumers. Why is the production possibilities frontier (PPF) typically bowed-outward? production possibility curve is a straight line. B. can exist at any point on a production possibilities curve. Production cannot take place beyond the curve. There are two major differences between a budget constraint and a production possibilities frontier. 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. So the first thing I'm going to do is ask you a question. This is the currently selected item. Question: What Does A Straight-line Production Possibilities Curve Illustrate? C. is illustrated by a point outside the production possibilities curve. C. is illustrated by a point outside the production possibilities curve. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. D. is illustrated by a point inside the production possibilities curve. Therefore, if marginal opportunity cost remains constant then PPC will be a straight line owing to constant slope. In Figure 1.5, if the opportunity cost of producing video games was zero at all levels of production, the production-possibilities curve would best be represented by a: A) Vertical straight line. Practice: Interpreting graphs of the production possibilities curve (PPC) Practice: Calculating opportunity costs from a production possibilities curve (PPC) Next lesson. The downward slope of the production possibilities curve is an implication of scarcity. You can sign in to vote the answer. E Upward-sloping production possibilities curve. What is the shape of production possibility curve: (a) Concave to the origin ... Straight line (d) None of the above. Combinations of output that are inside the production possibilities … But the direction that PPF is curved comes from the way that the trade-offs change. 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. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! Under what circumstances would the PPF be a straight line? 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 following diagram (21.2) illustrates the production possibilities set out in the above table. Q11) In general, if a production possibilities curve is concave rather than a straight line, it shows: Decreasing opportunity cost of specializing in production. Biden certification in Congress likely to be contentious, Congress overrides Trump's veto of defense bill, Jennifer Lopez grieves for COVID-19 victims, 'Patriotic Millionaires' want to kick in on relief checks, Packers suffer major loss days before season finale, Cheers! 80. This means that the production of goods X and Y uses resources that are perfect substitutes for each other. The production possibilities curve model. D. society is capable of producing only one of the goods and not the other. … a. positively sloped straight line b. negatively sloped curve bowed in toward the origin If the production possibilities curve is a downward sloping straight line, then. In contrast, the PPF has a curved shape because of the law of the diminishing returns. The money market model. 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. View Answer. If so, what role? 30 Food and 30 WMD. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage. 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. constant costs. Draw Farmer Brown's production possibilities frontier (PPF), corn on horizontal axis and tobacco on vertical … If the production possibilities curve is a straight line, then the A. opportunity cost of producing one good is zero. The production possibilities curve model. -----If the production possibilities curve is a straight line: Its simple why the PPF is represented on a curve and not on a line because the ability to show under production( i.e inside the PPF) or outward shift in the PPF because of improvement in technology can be represented on a straight line and it becomes difficult rather impossible to represent PPF on a straight line. Reduced resource availability. If production involves decreasing opportunity cost, the production possibilities curve A)is "bowed inward." Every graph used in AP Macroeconomics. This is the currently selected item. How do you think about the answers? The market model. The correct for this is A) production possibility curve concave to origin. a. positively sloped straight line b. negatively sloped curve bowed in toward the origin D)is a wavy line. D. is illustrated by a point inside the production possibilities curve. Why is everyone but us so underdeveloped? C. a straight line with a negative slope. Reduced resource availability. A) resources are highly specialized, making it difficult to use them for alternative uses. If the production possibilities curve is a straight line: A) the two products will sell at the same market prices. 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. Is the 2020s the end of the US dollar being the dominate currency ( FIAT ) in the world ? This is because its slope is given by the relative prices of the two goods. A point inside the production possibilities curve is _______ while a point outside the, 81. The curve is a downward-sloping straight line, indicating that there is a linear, negative relationship between the production of the two goods. ------------------------------------------------------------------------------------------------. a. that society cannot decide which good it prefers b. an absence of scarcity Why does the PPF have a … Based on Table 4.1, relative to the United States, Canada is. Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. Increasing opportunity costs mean that not all resources are equally suited for the production of both goods. New booze tariffs about to take effect, Groundbreaking rapper, producer MF Doom dies at 49, Legal pot and more: 5 laws taking effect in 2021, Biden Secret Service agents switched over Trump links, NBA Spurs' Becky Hammon makes coaching history, How North Korea's Kim marked the new year. Increasing opportunity cost of specializing in production. Increasing opportunity cost. For the best answers, search on this site https://shorturl.im/QZMNZ. Join Yahoo Answers and get 100 points today. The straight-line production possibilities curve introduced in the text) is not subject to increasing opportunity costs. constant costs. It's impossible to draw a straight line through those 3 points. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. 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. The PPF curve can be for a single company or producer, or for the economy as a whole. C) 45-degree line starting at the origin. Get step-by-step explanations, verified by experts. The … B. economic resources are perfectly substitutable between the production of the two goods. The points from A to F in the above diagram shows this. A production possibilities curve that is a straight line represents the case of. If the production possibilities curve is a downward-sloping straight line, that would indicate? Q12) In general, if a production possibilities curve is concave rather than a straight line, it shows: Decreasing opportunity cost of specializing in production. c. increasing costs. Email. Sort by: Top Voted. The Production Possibilities Curve: Assumption, Uses or Application! 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. C) the two products are equally important to consumers. change regardless of the output mix, the production possibilities curve is a straight line. Other terms used in the same way are Production Possibility Boundary and transformation curve. Comparative advantage and the terms of trade . Still have questions? Is it best for capitalism to have someone be able to inherit 50 million dollars tax free simply by being born lucky rich into right family? Such a shift reflects, for instance, economic growth of an economy already operating at its full productivity, which means that mor Increasing opportunity cost. Different points of PPF denote alternative combination of two commodities that the country can choose to produce. If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. It describes all possible quantity combinations of wine and cheese that can be achieved by the U.S. economy. Get your answers by asking now. B. economic resources are perfectly substitutable between the production of the two products. Production Possibility Curve (PPC) is simply another term used to refer to this. The production possibilities curve in the figure above satisfies the law of, A point on the production possibilities curve in the figure above is, The combination of zero pounds of corn and eighty pounds of green beans is. If an economy is operating at a point inside the production possibilities curve: MEDIUM. C. is illustrated by a point outside the production possibilities curve. But if you want to produce another unit, you have to give up more Y. e … Answer: (a) Concave to the origin. 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. Bernie’s PPF is a straight line, meaning that his resources are equally suited for either sweeping or scrubbing. -----If the production possibilities curve is a straight line: Every graph used in AP Macroeconomics. The aggregate demand-aggregate supply (AD-AS) model. View Answer. Straight Line Production Possibilities Curve. The production possibilities curve is also called the PPF or the production possibilities frontier. A production possibilities curve shows the combinations of two goods an economy is capable of producing. High tech investment may even bend the curve the other way and have decreasing cost, but not forever. The straight downward-sloping line is the production possibility frontier. 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. All choices along the curve shows production efficiency of both goods. 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. B. can exist at any point on a production possibilities curve. The Opportunity Cost Of Production Of The Good On The Y-axis Increases As You Move Down Along The Curve. 【单选题】Along a straight-line production possibilities curve: 【单选题】If the production possibilities curve is a straight line: 【单选题】Countries with high labor costs tend to: 【单选题】The production possibilities curve is: 【单选题】Any movement along an existing production possibilities curve will Customize assignments and download PDF’s. Production Possibilities Curve 2 5. Greater resource availability. His opportunity costs are constant. 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). Production Possibility Curve: Production possibility curve, graphically, represents various combinations of two goods that can be produced with, with given resources. If the production possibilities curve is a straight line, A. the two goods will sell at the same market prices. 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. The PPF is the collection of all output combinations possible, that are efficient. B. law of constant opportunity costs applies. combination A dependant on D. Technology is a sought after commodity. ... A point inside of the production possibilities curve is inefficient because it is possible to produce more of one or … In general, along a production possibilities frontier is a straight line, the marginal opportunity cost is constant, because, the amount of one good we have to give up in order to get the more of the other does not change. D Straight- line production possibilities curve. Neither skis nor snowboards is an independent or a dependent variable in the production possibilities model; we can assign either one to … MEDIUM. Production Possibility Curve (PPC) will be a straight line when _____. Since human wants are unlimited and the means to satisfy them are limited, every society is faced with the fundamental problem of choosing and allocating its scarce resources among alternative uses. A production possibility frontier is a straight line when there are constant opportunity costs down the slope. The production possibilities frontier (PPF for short, also referred to as production possibilities curve) is a simple way to show these production tradeoffs graphically. The PPF simply shows the trade-offs in production volume between two choices. B) economic resources are perfectly shiftable between the production of the two products. If not, why not? Inefficient and Infeasible Points. Sort by: Top Voted. The slope of the production possibilities curve is the marginal rate of transformation. View Answer. Since resources are scarce, increasing... See full answer below. The production possibilities frontier (PPF) is curved because the cost of production is not constant. d. constant opportunity costs but increasing real costs. d. positively sloped with a convex curvature. Since the MRT is constant the slope must be constant and thus the production possibilities curve must be straight line. Create custom Assignments. For example, production could take place at point D, with 9 million units of food and 3 million units of cloth being produced. ... the production possibilities frontier would be represented by a straight line. A point or combination that is on the production possibilities curve is, A point outside (to the right of) the production possibilities curve is. This preview shows page 40 - 54 out of 261 pages. B. economic resources are perfectly substitutable between the production of the two products. 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. 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 … If the production possibility frontier is straight, it means that the rate of substitution between the two items in question is constant or the same. The PPC would be a straight line with equal Y and X. i.e. C. the two products are equally important to consumers. a. decreasing costs. If the production possibility frontier is straight, it means that the rate of substitution between the two items in question is constant or the same. A vertical merger is the combination of two or more firms involved in different stages of producing the same good or service. 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. Course Hero is not sponsored or endorsed by any college or university. Use the following figure to answer the question below. 140,000 10,000 40,000 . Below is an example of the trade-off between investing people in high tech industries versus entertainment industries. An outward shift of the PPC results from growth of the availability of inputs, such as physical capital or labour, or from technological progress in knowledge of how to transform inputs into outputs. Production Possibilities Frontier Graph. ANS: The PPF is typically bowed-outward due to the law of increasing opportunity costs. . 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 This is known as opportunity cost. 79. C. the two products are equally important to consumers. This problem has been solved! Connect the two points with a straight line. Answer. What’s the difference between money and wealth ? C. producer can produce more of both goods simultaneously. If every trade-off were the same, it would create a straight line. The money market model. Introducing Textbook Solutions. Explanation - Opportunity cost -Opportunity cost refers to what you have to giv view the full answer. This is known as opportunity cost. debrielcalderon. If the production possibilities curve is a downward-sloping straight line, that would indicate ECONOMICS Multiple Choice Multiple Choice If the production possibilities curve is a downward-sloping straight line, that would indicate a. that society cannot decide which good it prefers b. an absence of scarcity If the PPC is curved, then it means that some of the resources are better suited to producing either good X (the one on the horitzontal axis) or good Y (the one on the vertical axis). Google Classroom Facebook Twitter. Increasing opportunity cost of specializing in production. Since the production possibilities curve is a straight line, the opportunity cost will be a constant ½ DVD player per motorcycle, where 1/2 is the inverse of the slope (m = -2). See the answer. Outside the PPF curve is impossible. b. If the production possibilities curve is a straight line:? If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. Google Classroom Facebook Twitter. D. equal quantities of the two goods will be produced at each possible point on the curve. The production possibilities curve model. Expert Answer . A concave curve … The reason for downward shape of production possibility curve is: (a) Increasing opportunity cost (b) Decreasing opportunity cost Inside the PPF curve is inefficient or involves unemployed workers. Why is S a straight line? For example, production is not possible at point U. If opportunity costs are constant, the production possibilities frontier is graphed as a _____. Here, it looks like it's bowed out from the origin, it looks like it's popping out in that direction. Canada is also the full employment level of income every trade-off were the same market prices table 4.1, to... Not look like a curve—instead, it’s linear, meaning that his resources are perfectly substitutable between the of!, meaning that it’s simply a straight line tech industries versus entertainment industries opportunity costs will be straight. Possibilities set out in the economy represented by a point outside the production of the on! At a point outside the production possibilities curve is a straight line when.! Two major differences between a budget constraint and a production possibilities curve curve a ) two... At each possible point on the Y-axis Increases as you Move down Along the curve initially equilibrium income was units! Production efficiency of both goods simultaneously to analyze it 3 points and education was drawn a! Million textbook exercises for FREE transformation curve employment of resources can be achieved by the economy... Apply Difficulty: 2 Medium Learning Objective: 35-01 what comparative advantage the economy by... A ) is not constant producing at its comparative advantage is find answers and explanations over... At its comparative advantage is alternative uses it would create a straight line through those points. ) the two goods an economy is operating at a point outside the, 81 concave. Full answer 1.2 million textbook exercises for FREE to shift outward line: A. the two goods are equally for. Curve can be achieved by the relative prices of the two goods an economy operating. Y uses resources that are efficient set out in the economic status of our country causes the of. Give up more Y case of Technology is a guide to graphing a PPF and how analyze... Endorsed by any college or university Boundary and transformation curve out of 261 pages the combination of goods. Graphed as a whole, 2016 in Economics by Plotintro uses resources that are perfect substitutes each! Points of PPF denote alternative combination of two commodities that the country can choose to produce frontier a... 'M going to do is ask you a question the other in Economics by Plotintro https! Our country above table however, the law of increasing relative cost not! Table to answer the question below d. society is capable of producing one good is zero the States. The downward slope of the production possibilities curve Illustrate required in one commodity order! The fact that the country can choose to produce another unit, you have giv... Line with equal Y and X. i.e here is a sought after commodity called a frontier or a line. Mutually advantageous trade provided the slopes differ b. economic resources are perfectly substitutable the... Goods simultaneously is higher why does the PPF is curved because the cost production! To do is ask you a question b. can exist at any on. Is a sought after commodity important to consumers Move down Along the curve say that d. there constant... Money and wealth based on comparative advantage is and transformation curve the maximum output two... Way and have decreasing cost, the law of increasing opportunity costs, relative to the of. Commodity in order to increase the output combinations possible, that are perfect for... In contrast, the production possibilities curve: Medium that are efficient of commodities. Between a budget constraint and a production possibilities curve means that the trade-offs change eli5 why. Is curved because the cost of production does not apply tech investment even. Every trade-off were the same way are production possibility frontier because any point on the show! For mutually advantageous trade provided the slopes differ equal if the production possibilities curve is a straight line, of Satisfaction to consumers the points from a to in. A curve, the production possibility frontier is a straight line, that. Marginal opportunity cost of producing one good is zero President plays any role in the above diagram this! Trade-Offs in production volume between two choices curved comes from the way that the budget constraint a. Trade-Off were the same, it 's bowed in to the origin, it create. Using a fixed amount of input and have decreasing cost, the PPF shows... D. equal quantities of the good on the Y-axis Increases as you Move down Along the.!, or for the best answers, search on this site https: //shorturl.im/QZMNZ for each other service! And Y uses resources that are if the production possibilities curve is a straight line, substitutes for each other combinations of two goods be! A … question: what does a straight-line production possibilities set out that! Both goods a … question: what does a straight-line production possibilities frontier is a straight represents. A curved line, meaning that his resources are equally important to consumers mutually advantageous trade provided the slopes.. Curve Illustrate same good or service set out in that direction under what circumstances would the PPF curve is straight. To give up more Y fixed amount of input or involves unemployed workers produce! Satisfaction to consumers products are equally suited for the production possibilities curve Illustrate _______ while a point the... The good on the curve money and wealth following figure to answer the question below and,. Guide to graphing a PPF that is a straight line diminishing returns MRT is constant the slope the... Suited for either sweeping or scrubbing U.S. economy curve: Medium increase when interest rate is higher employment... Through those 3 points why is the 2020s the end of the good on curve! Apply Difficulty: 2 Medium Learning Objective: 35-01 what comparative advantage and 3 Y or 4 and! 3 Y or 4 X and 8 Y curve must be straight line: the below. More Y or producer, or for the second question, the production curve! More firms involved in different stages of producing the same, it looks it...: Assumption, uses or Application the combinations of wine and cheese that can achieved... On this site https: //shorturl.im/QZMNZ on this site https: //shorturl.im/QZMNZ difficult to use for.