Question:
Production possibilities frontiers are linear because
(1) resources are being used fully and efficiently.
(2) of the Law of increasing opportunity costs.
(3) of inefficiencies in the economy.
(4) of constant opportunity costs.
(5) of non-homogeneous resources.
Correct Answer:
(4)
Answer Explanation:
A straight-line (linear) Production Possibilities Frontier indicates that the opportunity cost of producing one good in terms of the other remains exactly the same, no matter how much is produced. This assumes resources are perfectly adaptable (homogeneous).
Topic: PPC Year: 2021
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