Question

Suppose Germany produces only smartphones and tablets. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both tablets and smartphones.

Answer 1

Answer:

The correct answer is: The shape of Germany production possibilities frontier (PPF) should reflect the fact that as Germany produces more smartphones and fewer tablets, the opportunity cost of producing each additional smartphone remains Constant.

Explanation:

The frontier of possibilities varies the production of a particular good as productive resources are assigned. However, in practice, economies produce more than one good, and since productive inputs are limited, the allocation of them to produce one good means to stop allocating resources for the production of another, this implies that by producing more than one determined well you must "sacrifice" units of the other, this concept is known as opportunity cost. When increasing the production of one good necessarily implies decreasing the production of another, then we are facing an efficient allocation of resources.

The production possibilities frontier (F.P.P.) is called the outer section of the production possibilities set. When an economy is in the F.P.P. It is not possible to increase the production of one good without diminishing the production of another, so any basket that is in the F.P.P. It is a combination of efficient production.

The production possibilities frontier allows us to directly visualize the allocations of resources that are efficient and also the opportunity cost of production, to the extent that we can determine through it how much we should decrease the production of a good, when we want to increase The production of another.

For economists all costs are opportunity costs, so this concept is important for any economic analysis.