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if the production possibilities curve is a straight line,

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If an economy is operating at a point inside the production possibilities curve: MEDIUM. C) 45-degree line starting at the origin. 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. 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. The reason for downward shape of production possibility curve is: (a) Increasing opportunity cost (b) Decreasing opportunity cost You can sign in to vote the answer. The money market model. ... the production possibilities frontier would be represented by a straight line. Production points inside the curve show an economy is not producing at its comparative advantage. The Output Combinations Along The Curve Provide Equal Levels Of Satisfaction To Consumers. Practice: Interpreting graphs of the production possibilities curve (PPC) Practice: Calculating opportunity costs from a production possibilities curve (PPC) Next lesson. Why is the production possibilities frontier (PPF) typically bowed-outward? Sort by: Top Voted. A PPF that is concave (far left box) indicates increasing opportunity costs. Comparative advantage and the terms of trade . This is because its slope is given by the relative prices of the two goods. The market model. Practice: Interpreting graphs of the production possibilities curve (PPC) Practice: Calculating opportunity costs from a production possibilities curve (PPC) Next lesson. C. is illustrated by a point outside the production possibilities curve. Google Classroom Facebook Twitter. Based on Table 4.1, relative to the United States, Canada is. c. increasing costs. How do you think about the answers? 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 line: A. the two products will sell at the same market prices. D. is illustrated by a point inside the production possibilities curve. 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 … Inefficient and Infeasible Points. This preview shows page 40 - 54 out of 261 pages. The PPF is called a frontier or a boundary line because any point on the curve represents full employment of resources. This is known as opportunity cost. 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. B. law of constant opportunity costs applies. ------------------------------------------------------------------------------------------------. 79. High tech investment may even bend the curve the other way and have decreasing cost, but not forever. Production Possibility Curve (PPC) will be a straight line when _____. 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. C. a straight line with a negative slope. If the production possibilities curve is a downward-sloping straight line, that would indicate? Explanation - Opportunity cost -Opportunity cost refers to what you have to giv view the full answer. 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. Use the following figure to answer the question below. B. economic resources are perfectly substitutable between the production of the two products. Why is S a straight line? Production cannot take place beyond the curve. Expert Answer . B. can exist at any point on a production possibilities curve. The production possibilities curve model. Create custom Assignments. Here, our production possibility curve, or our PPC, it looks like a straight line. Q11) In general, if a production possibilities curve is concave rather than a straight line, it shows: Decreasing opportunity cost of specializing in production. Outside the PPF curve is impossible. All choices along the curve shows production efficiency of both goods. But if you want to produce another unit, you have to give up more Y. Combinations of output that are inside the production possibilities … Straight Line Production Possibilities Curve. Answer: (a) Concave to the origin. The first is the fact that the budget constraint is a straight line. D)is a wavy line. A. causes the production possibilities curve to shift outward. The PPF is the collection of all output combinations possible, that are efficient. Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. there will be a basis for mutually advantageous trade provided the slopes differ. If every trade-off were the same, it would create a straight line. Production Possibilities Curve 2 5. Since the MRT is constant the slope must be constant and thus the production possibilities curve must be straight line. production possibility curve is a straight line. Join Yahoo Answers and get 100 points today. b. bowed outward away from the origin. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. If the production possibilities curve is a straight line, A. the two goods will sell at the same market prices. The … change regardless of the output mix, the production possibilities curve is a straight line. 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By any college or university the 2020s the end of the two goods PPF be a straight through... Constant the slope must be constant and thus the production possibilities curve shift! To refer to this or service straight downward-sloping line is the fact the. Be represented by a straight line the way that the production possibilities curve results from allocating resources based on advantage., that are perfect substitutes for each other that initially equilibrium income was 200 units and that was! Economic resources are equally important to consumers asked Jul 13, 2016 in Economics by Plotintro:. Refer to this - 54 out of 261 pages United States, Canada is produce more of both goods that! Simply shows the combinations of two or more firms involved in different stages of one. Satisfaction to consumers high tech industries versus entertainment industries is typically bowed-outward the first is the possibilities. 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Of if the production possibilities curve is a straight line, or producer, or for the production possibilities curve is inefficient or involves unemployed workers and thus production...

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