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mmi mmi
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A year ago

The diagram below shows two production possibilities boundaries for Country X.

Short description: A graph plots consumer goods against capital goods. Long description: The horizontal axis represents consumer goods. The vertical axis represents capital goods. The graph plots two concave down decreasing curves. The first curve, P P B subscript 1 begins at a point on the vertical axis, passes through the points, F, A, and B, and ends at a point on the horizontal axis. The second curve, P P B subscript 2 begins at a point on the vertical axis (above the point where the first curve begins), passes through a point, E, and ends at a point on the horizontal axis (to the right of the first curve). The point, C lies near the horizontal axis and parallel to A. The point, D is to the right of point E.

FIGURE 1-4

Refer to Figure 1-4. The production possibilities boundaries are drawn concave to the origin. What does this shape of the PPB demonstrate?



▸ the constant opportunity cost of producing more of either good

▸ the decreasing opportunity cost of producing more of either good

▸ the increasing opportunity cost of producing more of either good

▸ the scarcity of resources in the economy

▸ the unfair distribution of resources in the economy
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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Akabbett1Akabbett1
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