Abe starts exercising regularly, and after a few months he can do twice as much of everything. In a single day Abe can now make 10 hamburgers or 8 milkshakes rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's production possibility frontier has _____, but his opportunity costs of making milkshakes _____.
A)shifted right; are unchanged
B)shifted right; have decreased
C)not changed; have increased
D)not changed; have decreased

Question

Quizplus · Accepted Answer

Abe's production possibility frontier has shifted right because he can now produce more of both goods. However, his opportunity costs of making milkshakes have remained unchanged because the ratio of hamburgers to milkshakes he can produce has not changed. He still has to give up 2.5 hamburgers to make one milkshake.

Abe Starts Exercising Regularly, and After a Few Months He