Which production possibilities frontier (PPF) reflects increasing opportunity costs? Option d. PPF 4 is correct.
What is the relationship between PPF and opportunity cost?
In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. But, opportunity cost usually will vary depending on the start and end points.
Is the law of increasing opportunity cost reflected in the curve?
As it relates to production possibilities analysis, the law of increasing opportunity cost is reflected in curve: Gamma can produce 120 tons of tea or 120 tons of pots.
What does movement down production possibilities curve mean?
The movement down the production possibilities curve from point A to point E suggests that the production of: both bicycles and computers is subject to increasing opportunity costs. reduced if marginal costs exceed marginal benefits. where MB = MC. resources are not generally equally efficient in producing every good.
How is the PPC related to the production possibilities curve?
Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable. The opportunity cost of moving from one efficient combination of production to another efficient combination of production is how much of one good is given up in order to get more of the other good.
When does the opportunity cost of a good remain constant?
when the opportunity cost of a good remains constant as output of the good increases, which is represented as a PPC curve that is a straight line; for example, if Colin always gives up producing 2 fidget spinners every time he produces a Pokemon card, he has constant opportunity costs.
