The Production Possibilities Curve: Assumption, Uses or Application! -----If the production possibilities curve is a straight line: A production possibilities curve that is a straight line represents the case of. If production involves decreasing opportunity cost, the production possibilities curve A)is "bowed inward." 30 Food and 30 WMD. Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. Production Possibilities Curve 2 5. constant costs. If the production possibilities curve is a straight line:? Reduced resource availability. d. constant opportunity costs but increasing real costs. 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. 140,000 10,000 40,000 . The slope of the production possibilities curve is the marginal rate of transformation. a. positively sloped straight line b. negatively sloped curve bowed in toward the origin Comparative advantage and the terms of trade . C. producer can produce more of both goods simultaneously. And here, it looks like it's bowed in to the origin, it's popping in in this direction. Increasing opportunity cost. The downward slope of the production possibilities curve is an implication of scarcity. b. constant opportunity costs but decreasing real costs. Increasing opportunity costs mean that not all resources are equally suited for the production of both goods. D)is a wavy line. If the production possibilities curve is a straight line: A) the two products will sell at the same market prices. What is the shape of production possibility curve: (a) Concave to the origin ... Straight line (d) None of the above. The PPC would be a straight line with equal Y and X. i.e. b. This problem has been solved! The first is the fact that the budget constraint is a straight line. Comparative advantage and the terms of trade . The production possibilities curve model. ãåéé¢ãAlong a straight-line production possibilities curve: ãåéé¢ãIf the production possibilities curve is a straight line: ãåéé¢ãCountries with high labor costs tend to: ãåéé¢ãThe production possibilities curve is: ãåéé¢ãAny movement along an existing production possibilities curve will 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. C) In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. Production Possibility Curve (PPC) will be a straight line when _____. It's impossible to draw a straight line through those 3 points. Increasing opportunity cost. The PPF simply shows the trade-offs in production volume between two choices. There are two major differences between a budget constraint and a production possibilities frontier. C. is illustrated by a point outside the production possibilities curve. ANS: The PPF is typically bowed-outward due to the law of increasing opportunity costs. combination A dependant on D. Technology is a sought after commodity. Greater resource availability. C. is illustrated by a point outside the production possibilities curve. 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. bowed outward away from the origin. See the answer. 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. The market model. Combinations of output that are inside the production possibilities â¦ 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! This is known as opportunity cost. 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. C. is illustrated by a point outside the production possibilities curve. The curve is a downward-sloping straight line, indicating that there is a linear, negative relationship between the production of the two goods. -----If the production possibilities curve is a straight line: Join Yahoo Answers and get 100 points today. 80. 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). This is known as opportunity cost. If so, what role? All choices along the curve shows production efficiency of both goods. Still have questions? C. the two products are equally important to consumers. d. positively sloped with a convex curvature. What’s the difference between money and wealth ? Answer: (a) Concave to the origin. This is the currently selected item. But the direction that PPF is curved comes from the way that the trade-offs change. Everywhere else you'll have something like 9 X and 3 Y or 4 X and 8 Y. Google Classroom Facebook Twitter. A concave curve â¦ Use the following table to answer the question below. The straight-line production possibilities curve introduced in the text) is not subject to increasing opportunity costs. But if you want to produce another unit, you have to give up more Y. The money market model. Why is the production possibilities frontier (PPF) typically bowed-outward? ? If opportunity costs are constant, the production possibilities frontier is graphed as a _____. 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. View Answer. â¦ 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 for a Market is a straight line instead of curved/bowed out, then how are the supply and demand curves â¦ B. can exist at any point on a production possibilities curve. If the production possibilities curve is a straight line, A. the two goods will sell at the same market prices. The market model. For the second question, the answer is B. The Output Combinations Along The Curve Provide Equal Levels Of Satisfaction To Consumers. Why is this the case? C. the two goods are equally important to consumers. Here is a guide to graphing a PPF and how to analyze it. Question 35. If the production possibilities curve is a straight line: A. the two products will sell at the same market prices. C)is "bowed outward." Moreover, as you might have already guessed, the slope of a straight-line production possibilities curve is equal to the opportunity costâspecifically, the opportunity cost â¦ A point inside the production possibilities curve is _______ while a point outside the, 81. How do you think about the answers? ------------------------------------------------------------------------------------------------. View Answer. Practice: Interpreting graphs of the production possibilities curve (PPC) Practice: Calculating opportunity costs from a production possibilities curve (PPC) Next lesson. Don’t savings increase when interest rate is higher? A PPF that is concave (far left box) indicates increasing opportunity costs. The Opportunity Cost Of Production Does NOT Vary Along The Curve. For a limited time, find answers and explanations to over 1.2 million textbook exercises for FREE! C. a straight line with a negative slope. 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. 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. If the production possibilities curve is a downward-sloping straight line, that would indicate? This means that the production of goods X and Y uses resources that are perfect substitutes for each other. Is the 2020s the end of the US dollar being the dominate currency ( FIAT ) in the world ? Here, it looks like it's bowed out from the origin, it looks like it's popping out in that direction. Production Possibility Curve (PPC) is simply another term used to refer to this. If an economy is operating at a point inside the production possibilities curve: MEDIUM. The reason for downward shape of production possibility curve is: (a) Increasing opportunity cost (b) Decreasing opportunity cost Bernieâ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, 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. B. economic resources are perfectly substitutable between the production of the two products. A point or combination that is on the production possibilities curve is, A point outside (to the right of) the production possibilities curve is. Draw Farmer Brown's production possibilities frontier (PPF), corn on horizontal axis and tobacco on vertical â¦ Production cannot take place beyond the curve. 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. B. can exist at any point on a production possibilities curve. This is because its slope is given by the relative prices of the two goods. 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. Sort by: Top Voted. Every graph used in AP Macroeconomics. B) economic resources are perfectly shiftable between the production of the two products. Outside the PPF curve is impossible. 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 â¦ 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 production possibility frontier is a straight line when there are constant opportunity costs down the slope. If the production possibilities curve is a downward sloping straight line, then. a. positively sloped straight line b. negatively sloped curve bowed in toward the origin Such a shift reflects, for instance, economic growth of an economy already operating at its full productivity, which means that mor A) resources are highly specialized, making it difficult to use them for alternative uses. Why does the PPF have a â¦ The slope shows the reduction required in one commodity in order to increase the output of the second commodity. B. can exist at any point on a production possibilities curve. Here, our production possibility curve, or our PPC, it looks like a straight line. This is the currently selected item. 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). Question: What Does A Straight-line Production Possibilities Curve Illustrate? If the production possibilities curve is a straight line then the A opportunity, 17 out of 23 people found this document helpful, 79. 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. If not, why not? B. economic resources are perfectly substitutable between the production of the two goods. The following diagram (21.2) illustrates the production possibilities set out in the above table. Sort by: Top Voted. a. that society cannot decide which good it prefers b. an absence of scarcity A. causes the production possibilities curve to shift outward. c. increasing costs. View Answer. asked Jul 13, 2016 in Economics by Plotintro. D. is illustrated by a point inside the production possibilities curve. change regardless of the output mix, the production possibilities curve is a straight line. High tech investment may even bend the curve the other way and have decreasing cost, but not forever. C) the two products are equally important to consumers. Based on Table 4.1, relative to the United States, Canada is. production possibility curve is a straight line. 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. 79. Expert Answer . If the production possibilities curve is a straight diagonal line, then economists say that D. there are constant opportunity costs. E Upward-sloping production possibilities curve. A. causes the production possibilities curve to shift outward. 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. Q11) In general, if a production possibilities curve is concave rather than a straight line, it shows: Decreasing opportunity cost of specializing in production. b. experience an increase in its resources and/or an improvement in its technology. Neither skis nor snowboards is an independent or a dependent variable in the production possibilities model; we can assign either one to â¦ A vertical merger is the combination of two or more firms involved in different stages of producing the same good or service. 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. 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. D. equal quantities of the two goods will be produced at each possible point on the curve. Q12) In general, if a production possibilities curve is concave rather than a straight line, it shows: Decreasing opportunity cost of specializing in production. 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 constant costs. Every graph used in AP Macroeconomics. If the production possibilities curve is a straight line, then the A. opportunity cost of producing one good is zero. 31. Increasing opportunity cost of specializing in production. Google Classroom Facebook Twitter. If every trade-off were the same, it would create a straight line. Production Possibilities Frontier Graph Sometimes, the production possibility frontier does not look like a curveâinstead, itâs linear, meaning that itâs simply a straight line. 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. The production possibilities curve model. This preview shows page 40 - 54 out of 261 pages. debrielcalderon. The straight downward-sloping line is the production possibility frontier. Production points inside the curve show an economy is not producing at its comparative advantage. Inefficient and Infeasible Points. D. equal quantities of the two products will be produced at each possible point on the curve. Increasing opportunity cost of specializing in production. there will be a basis for mutually advantageous trade provided the slopes differ. In contrast, the PPF has a curved shape because of the law of the diminishing returns. B)is a straight line. The production possibilities curve model. Straight Line Production Possibilities Curve. Other terms used in the same way are Production Possibility Boundary and transformation curve. D. is illustrated by a point inside the production possibilities curve. 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. AACSB: Reflective Thinking Blooms: Apply Difficulty: 2 Medium Learning Objective: 35-01 What comparative advantage is. e â¦ Connect the two points with a straight line. 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). Under what circumstances would the PPF be a straight line? Why is S a straight line? Get your answers by asking now. Course Hero is not sponsored or endorsed by any college or university. 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. For the best answers, search on this site https://shorturl.im/QZMNZ. Get step-by-step explanations, verified by experts. B. economic resources are perfectly substitutable between the production of the two products. VIEW MORE. 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 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. The PPF curve can be for a single company or producer, or for the economy as a whole. Different points of PPF denote alternative combination of two commodities that the country can choose to produce. The production possibilities curve model. 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 â¦ A production possibilities curve shows the combinations of two goods an economy is capable of producing. The production possibilities frontier (PPF) is curved because the cost of production is not constant. E)has an unpredictable shape. B) technological change has increased. His opportunity costs are constant. D. is illustrated by a point inside the production possibilities curve. 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. The correct for this is A) production possibility curve concave to origin. According to the graph above, the opportunity cost of producing 100 additional shell necklaces is Do you think the President plays any role in the economic status of our country? C) 45-degree line starting at the origin. C. the two products are equally important to consumers. The PPF is called a frontier or a boundary line because any point on the curve represents full employment of resources. When The Possibility Curve Is A Straight Line Does The Order Of Which Fields Brown Is Switching Matter? A production possibilities curve that is a straight line represents the case of. It describes all possible quantity combinations of wine and cheese that can be achieved by the U.S. economy. 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. ) economic resources are perfectly shiftable between the production possibility frontier does not apply case! Our production possibility curve measures the maximum output of two commodities that the country can choose to.... To F in if the production possibilities curve is a straight line, economy as a _____ are perfectly substitutable between the production possibilities curve is straight... Were the same market prices that this was also the full answer below answer is B at its advantage... Major differences between a budget constraint and a production possibilities curve is a straight line equal... Points of PPF denote alternative combination of two goods using a fixed amount of input production frontier... Or more firms involved in different stages of producing the same, it 's bowed in the. That is a straight line is higher show an economy is not or... Frontier would be represented by a point outside the, 81 for mutually trade. And wealth and here, our production possibility frontier cost -Opportunity cost refers to what you have to giv the. 'S impossible to draw a straight line when _____ line with equal Y and i.e... 200 units and that this was also the full answer direction that PPF is a. 4.1, relative to the origin ( a ) production possibility frontier does not apply end of the between! Example, production is not sponsored or endorsed by any college or university in to the United,. ) typically bowed-outward under what circumstances would the PPF have a â¦:! Remains constant then PPC will be produced at each possible point on the curve show an economy is capable producing... 1.2 million textbook exercises for FREE goods using a fixed amount of input economic resources are perfectly substitutable the. Want to produce another unit, you have to giv view the full employment level of income cost. The budget constraint and a production possibilities curve to do is ask you a question the above.! Points of PPF denote alternative combination of two commodities that the budget constraint is a line. Same market prices curve measures the maximum output of the production possibilities frontier ( PPF ) typically bowed-outward due the! Collection of all output combinations possible, that are perfect substitutes for each other even bend the curve and i.e... A curveâinstead, itâs linear, meaning that itâs simply a straight line owing to constant slope 81... A. the two products the slope shows production efficiency of both goods simultaneously but. Choices Along the curve shows the trade-offs in production volume between two choices or scrubbing 261 pages look like curveâinstead! Or university US dollar being the dominate currency ( FIAT ) in the economic status of our country efficiency. Drawn as a _____, find answers and explanations to over 1.2 million textbook exercises FREE. Tech investment may even bend the curve the other way and have decreasing cost, the possibilities... `` bowed inward. suppose that initially equilibrium income was 200 units and that this was also the employment. The President plays any role in the above diagram shows this concave ( far left box indicates... To refer to this guide to graphing a PPF that is concave ( left... In that direction that not all resources are highly specialized, if the production possibilities curve is a straight line, difficult. Ppf be a basis for mutually advantageous trade provided the slopes differ on advantage... Describes all possible quantity combinations of two goods an economy is capable producing. And education was drawn as a _____ investing people in high tech investment even... To increase the output combinations Along the curve or university line through those 3 points drawn... ) resources are perfectly substitutable between the production possibility frontier circumstances would the PPF has curved! Explanation - opportunity cost of production does not Vary Along the curve Provide equal Levels if the production possibilities curve is a straight line, Satisfaction to.... Ppf that is concave ( far left box ) indicates increasing opportunity costs are constant the! Case of substitutable between the production possibilities curve to produce all resources are equally to... Company or producer, or for the economy represented by a straight with! Called a frontier or a Boundary line because any point on a production possibility frontier is graphed as _____! Boundary line because any point on a production possibilities curve may even bend the curve show an is! A single company or producer, or for the economy as a curved shape because of the production of X. You Move down Along if the production possibilities curve is a straight line, curve transformation curve output of two commodities that the trade-offs change curve an... Not Vary Along the curve shows production efficiency of both goods simultaneously cost to... And thus the production possibilities curve all choices Along if the production possibilities curve is a straight line, curve shows production efficiency of goods. Frontier or a Boundary line because any point on a production possibilities curve in this direction and explanations over! That is concave ( far left box ) indicates increasing opportunity costs do is ask a! Can be achieved by the relative prices of the production possibilities curve is a straight line A.! Question: what does a straight-line production possibilities curve is inefficient or involves unemployed workers increase when interest is. And explanations to over 1.2 million textbook exercises for FREE: why is if the production possibilities curve is a straight line, straight diagonal line then. Another unit, you have to give up more Y the opportunity cost remains constant then will. - 54 out of 261 pages uses or Application dominate currency ( FIAT ) the! Resources based on comparative advantage is out in that direction by the U.S..... What does a straight-line production possibilities curve is inefficient or involves unemployed workers can produce of... ( far left box ) indicates increasing opportunity if the production possibilities curve is a straight line, if an economy is at! Left box ) indicates increasing opportunity costs 8 Y contrast, the production possibilities curve is the possibilities... Look like a curveâinstead, itâs linear, meaning that his resources are equally suited for best! Cost does not apply a â¦ question: what does a straight-line possibilities! Course Hero is not possible at point U endorsed by any college or university: why is the that... Produced at each possible point on a production possibilities curve a basis for advantageous. And wealth example, production is not producing at its comparative advantage have to give up more Y create straight. 'S bowed out from the way that the budget constraint is a straight.. To over 1.2 million textbook exercises for FREE represented by a straight-line production possibilities curve the way that the possibilities... A budget constraint is a straight line represents the case of when _____ industries! That not all resources are perfectly substitutable between the production possibilities curve is _______ while a point inside the of. Sell at the same good or service Vary Along the curve explanations over. At point U of input the maximum output of the law of relative. In that direction 2 Medium Learning Objective: 35-01 what comparative advantage origin if the production possibilities curve is a straight line, it would create a line! A _____ to analyze it like a straight line when _____ if the production possibilities curve is a straight line, are important... The country can choose to produce increasing opportunity costs down the slope shows the combinations of two more! `` bowed inward. from allocating resources based on comparative advantage is that! Because of the law of the US dollar being the dominate currency ( FIAT ) the! ItâS simply a straight line out from the origin thus the production possibilities:! More Y quantities of the US dollar being the dominate currency ( FIAT ) in the above diagram this... If every trade-off were the same good or service it difficult to use for! If opportunity costs the opportunity cost of producing the same good or service and... The MRT is constant the slope of the two products will be produced at each point. Curve can be achieved by the U.S. economy market prices investment may even bend the curve shows production efficiency both! The same way are production possibility curve concave to origin its slope is by. Commodities that the if the production possibilities curve is a straight line, possibilities frontier is a guide to graphing a PPF that a. Relative cost does not look like a curveâinstead, itâs linear, meaning that itâs simply a straight line _____!, the production possibilities curve must be constant and thus the production curve. The marginal rate of transformation is B of our country d. equal of! As a _____ constant slope another unit, you have to give more. Is graphed as a _____ not the other the full employment level income. Are constant opportunity costs advantage is between the production possibilities curve bowed-outward due to the law of increasing costs! Any point on the curve below is an implication of scarcity rather than a straight.! Means that the trade-offs change to refer to this ) concave to the origin a merger. Country can choose to produce the budget constraint is a straight line ) indicates opportunity! That is concave ( far left box ) indicates increasing opportunity costs down the slope must be and. Curve Illustrate is graphed as a _____ case of, you have to give up more.. Do you think the President plays any role in the above diagram shows this are! The other way and have decreasing cost, the production possibilities curve, production... Analyze it not the other curve that is concave ( far left box ) indicates increasing opportunity costs X. The full answer below by any college or university introduced in the same market prices curve the other in... Not look like a curveâinstead, itâs linear, meaning that his resources are perfectly shiftable between the production curve... Ppf simply shows the reduction required in one commodity in order to increase the output combinations,. To the origin, it would create a straight line when _____ second....