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Scenario: Linear Production Possibility Frontier
Largetown has a linear production possibility frontier, and it produces socks and shirts with 80 hours of labor. The table shows the number of hours of labor necessary to produce one pair of socks or one shirt.
-(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear Production Possibility Frontier. If Largetown's labor resource decreases by 40 hours, the opportunity cost of producing shirts:
A)increases.
B)decreases.
C)does not change.
D)may or may not change depending upon the number of pairs of socks it wishes to produce.

Question

Use the following to answer questions:
Scenario: Linear Production Possibility Frontier
Largetown has a linear production possibility frontier, and it produces socks and shirts with 80 hours of labor. The table shows the number of hours of labor necessary to produce one pair of socks or one shirt. 
-(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear Production Possibility Frontier. If Largetown's labor resource decreases by 40 hours, the opportunity cost of producing shirts:
A)increases. 
B)decreases. 
C)does not change. 
D)may or may not change depending upon the number of pairs of socks it wishes to produce.

Quizplus · Accepted Answer

In a linear production possibility frontier, the opportunity cost remains constant regardless of changes in resources, as the slope of the frontier does not change.

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