Question

If the production possibilities curve is a straight line:

A. The opportunity cost of producing one more unit of goods is constant.
B. The opportunity cost of producing one more unit of goods is increasing.
C. The opportunity cost of producing one more unit of goods is decreasing.
D. The opportunity cost of producing one more unit of goods is changing.

Answer 1

The answer is A. The opportunity cost of producing one more unit of goods is constant if the production possibilities curve is a straight line, illustrating concepts such as absolute and comparative advantage.

Step-by-step explanation:

If the production possibilities curve is a straight line, it indicates that the opportunity cost of producing one more unit of goods is constant. This outcome occurs because the slope of the production possibilities curve represents the opportunity cost, with its absolute value indicating how much of one good must be given up to produce additional units of another good. In the case of a straight-line production possibilities curve, this value does not change; the amount of resources needed to produce additional units remains the same at all points along the curve. It simplifies the illustration of economic themes like absolute and comparative advantage, even though it is not the most realistic representation of real-world production conditions.