Question

Suppose South Africa produces only tablets and smartphones. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both smartphones and tablets.The shape of South Africa's production possibilities frontier (PPF) should reflect the fact that as South Africa produces more smartphones and fewer tablets, the opportunity cost of producing each additional smartphone _________.

Answer 1

The opportunity cost will remain constant.

Step-by-step explanation:

We know that on a production possibility curve, we need to reduce the production of one good to increase the production of the other. The shape of the curve is concave tot he origin because of specialization. This means that the resources cannot be perfectly substituted in the production of two goods. So as we increase the production of one good its opportunity cost increases.

But suppose if the resources are perfectly substitutable then, in that case, the production possibility frontier will be a straight line indicating constant opportunity cost.