Question

As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne’s production possibilities frontier is a straight line if

1) she faces no trade-off between writing term papers and completing homework assignments.
2) she can switch between writing term papers and completing homework assignments at a constant rate.
3) the rate at which she can switch between homework assignments and term papers depends on the number of homework assignments she is completing and on the number of term papers she is writing.
4) she is required by her professors to spend half of her time on term papers and the other half of her time on homework assignments.

Answer 1

The correct answer is option 2.

Step-by-step explanation:

A straight line production possibility frontier implies that the resources can be perfectly substituted for both uses that is writing term papers and completing homework assignments.

In other words, it means that the opportunity cost will be constant as the production of goods is changed. This means that Anne can switch between term papers and assignments at a constant rate.