Question

The production possibilities frontier (PPF) illustrates the combinations of goods that society can consume when trading...

The production possibilities frontier (PPF) illustrates the combinations of goods that society can consume when trading with other producers.

True

False

When it is said that trade between nations can make both sides of the trade better off, this means that all citizens in each nation will benefit.

True

False

A production possibilities frontier (PPF) is characterized by increasing opportunity costs when

a.

​the PPF is bowed outward

b.

​the PPF is a straight line

c.

​increasing opportunity costs do not occur with PPF's

d.

​the PPF is bowed inward

Homework Answers

Answer #1

Answer 1. False

Explanation: The production possibilities frontier (PPF) illustrates the combinations of goods that an economy can produce with the help of its given resources and technology level.

Answer 2. False

Explanation: Trade benefits the overall wellbeing of people in both nations. However, each and every citizen may not be directly benefitted from trade.

Answer 3. Option a. the PPF is bowed outward

Explanation: When opportunity cost is constant, the PPF is a straight line. When opportunity cost is decreasing, the PPF is bowed inward. Lastly, when the opportunity cost is increasing PPF is bowed outward

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