ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The prices of the two products are the same.
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Both products are equally capable of satisfying consumer wants.
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As more of one good is produced, increasing amounts of the other good must be given up.
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It is possible to produce more of both products.
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Resources are perfectly substitutable between the production of the two goods.
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Detailed explanation-1: -Which of the following is true if the production possibilities curve is a curved line concave to the origin? Resources are perfectly substitutable between the production of the two goods.
Detailed explanation-2: -Answer and Explanation: If the production possibility curve is a straight line, then the slope of the curve is constant. This then implies that the marginal rate of technical substitution between the two goods is also constant.
Detailed explanation-3: -If the shape of the PPF curve is a straight-line, the opportunity cost is constant as the production of different goods is changing. But, opportunity cost usually will vary depending on the start and end points.
Detailed explanation-4: -The correct option is(a) It assumes a fixed quantity of resources. Economists have developed an economic concept to measure the production capacity of an economy. This concept is called the “production possibilities curve (PPC), ” which shows all potential combinations of goods producible within an economy.