Question

When the opportunity cost associated with increasing the production of one good or service in terms of another is constant at every level of production, then the production possibility frontier is:______.

Answer 1

When the opportunity cost associated with increasing the production of one good or service in terms of another is constant at every level of production, then the production possibility frontier is rightward.

What is production possibility frontier?

A model used to illustrate the trade-offs related to splitting resources between the production of two items is called the Production Possibilities Curve (PPC). The PPC is a useful tool for demonstrating the ideas of scarcity, opportunity cost, efficiency, and economic development and contraction.

The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a different activity is known as the opportunity cost in microeconomic theory. Simply put, it means that if you choose one activity, you forfeit the chance to do another.

We can produce more as the economy expands and all other factors remain the same, hence this will cause a movement in the production possibilities curve to the right, or outward.

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