When will a production possibilities frontier be linear and not bowed out?
A)If no tradeoffs exist.
B)If the tradeoff between the two goods is always at a constant rate.
C)If unemployment is zero.
D)If resources are allocated efficiently.

Question

Quizplus · Accepted Answer

A production possibilities frontier is bowed out when the opportunity cost of producing one good increases as more of it is produced. This happens when resources are not suited equally well for both goods. If the tradeoff between the two goods is always at a constant rate, the production possibilities frontier will be linear, indicating that resources are equally suited for the production of both goods.

When Will a Production Possibilities Frontier Be Linear and Not