Question

Specialization and production possibilities Suppose the United Kingdom produces only tablets and smartphones. 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 smartphones and tablets. The shape of the United Kingdom's production possibilities frontier (PPF) should reflect the fact that as the United Kingdom produces more smartphones and fewer tablets, the opportunity cost of producing each additional smartphone increases The following graphs show two possible PPFs for the United Kingdom's economy: a straight-line PPF (PPF1) and a bowed-out PPF ( PPF2).Figure:4 graphs are shown

Answer 1

Answer:

It is explained in the question itself that the resources are not specialized for the production of any one commodity. They have mid that the same resource can be used for the production of both smart phones as well as the tablets. Thus, when the UK increases the production of the smart phones, the opportunity cost of producing the Tablets remains constant or remains the same because the trade-off between the goods will be constant.

Thus, when the opportunity cost remains constant and the economy carries on the production, then the Production Possibility Frontier of the economy will be represented with the help of a straight line PPF. Here in the graphs, Graph 1 represents the straight line PPF and thus, the trade-off between the smart phones and the tablets will be represented by the Graph 1.