Question

The production possibilities curves suggest that:A) West Mudville should specialize in, and export, baseball bats.B) workers will try to immigrate from West Mudville to East Mudville.C) West Mudville should specialize in, and export, both baseballs and baseball bats.D) East Mudville should specialize in, and export, baseball bats.

Answer 1

Answer:

A is the correct option.

Explanation:

West Mudville should specialize in and export baseball bats.

Production possibility curve illustrates the amount of two different goods which can be produced when there is fixed availability of a resource which both the items use for manufacture. In PPC it is assumed that the production will be optimally efficient. It is known as transformation curve. In macroeconomics it represent the point where country's economy is most efficiently producing goods and services, hence allocating the resources in the best way.