Production Possibility Curve (PPC) is simply another term used to refer to this. The points from A to F in the above diagram shows this. If not, why not? 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. 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. 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 … ... A point inside of the production possibilities curve is inefficient because it is possible to produce more of one or … There are two major differences between a budget constraint and a production possibilities frontier. Here is a guide to graphing a PPF and how to analyze it. The first is the fact that the budget constraint is a straight line. Inside the PPF curve is inefficient or involves unemployed workers. Why is the production possibilities frontier (PPF) typically bowed-outward? Question 35. A. causes the production possibilities curve to shift outward. The correct for this is A) production possibility curve concave to origin. See the answer. A. causes the production possibilities curve to shift outward. The straight downward-sloping line is the production possibility frontier. 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. View Answer. 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. A) resources are highly specialized, making it difficult to use them for alternative uses. Connect the two points with 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. This preview shows page 40 - 54 out of 261 pages. Use the following figure to answer the question below. ELI5:Why is a production possibility frontier displayed as a curve, rather than a straight line? C. the two products are equally important to consumers. If so, what role? Why does the PPF have a … Answer. The following diagram (21.2) illustrates the production possibilities set out in the above table. Reduced resource availability. C. a straight line with a negative slope. Use the following table to answer the question below. b. constant opportunity costs but decreasing real costs. A production possibilities curve shows the combinations of two goods an economy is capable of producing. 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. Production Possibility Curve (PPC) will be a straight line when _____. Reduced resource availability. Inefficient and Infeasible Points. Sometimes, the production possibility frontier does not look like a curve—instead, it’s linear, meaning that it’s simply a straight line. The … Why is everyone but us so underdeveloped? Outside the PPF curve is impossible. Increasing opportunity cost of specializing in production. B. can exist at any point on a production possibilities curve. constant costs. All choices along the curve shows production efficiency of both goods. 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). Explanation - Opportunity cost -Opportunity cost refers to what you have to giv view the full 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. ? 80. 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 money market model. And here, it looks like it's bowed in to the origin, it's popping in in this direction. VIEW MORE. AACSB: Reflective Thinking Blooms: Apply Difficulty: 2 Medium Learning Objective: 35-01 What comparative advantage is. D. equal quantities of the two products will be produced at each possible point on the curve. If the production possibilities curve is a straight line, then the A. opportunity cost of producing one good is zero. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. The money market model. Customize assignments and download PDF’s. 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 -----If the production possibilities curve is a straight line: View Answer. 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 production possibilities curve is also called the PPF or the production possibilities frontier. If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. d. constant opportunity costs but increasing real costs. B. economic resources are perfectly substitutable between the production of the two products. 31. 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. D. is illustrated by a point inside the production possibilities curve. If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. D. equal quantities of the two goods will be produced at each possible point on the curve. 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. However, the production possibilities frontier for healthcare and education was drawn as a curved line. 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. 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. 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