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QUESTION 18 The production possibilities curve of a country will be a straight line if _____.​...

QUESTION 18

  1. The production possibilities curve of a country will be a straight line if _____.​

    a.

    ​the country has an absolute advantage in the production of each commodity
    b.

    ​the resources in the country are equally adaptable to the production of each commodity
    c.

    ​the country completely specializes in the production of the good with the lowest opportunity cost
    d.

    ​the production of each commodity is subject to economies of scale
    e.

    ​the country completely specializes in the production of the good with the highest opportunity cost
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Answer #1

The production possibilities curve (PPC) of a country will be a straight line if the country has an absolute advantage in the production of each commodity because a straight PPC indicates a constant opportunity cost of producing each good. Thus to produce a good the country has to forgo of producing the other good.

Thus the first option is the correct answer. i.e. The country has an absolute advantage in the production of each commodity is the correct answer.

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