Question:
Three points on the production possibilities curve of a certain country that produces only two goods, X and Y are given below. (A: 3X, 0Y), (B: 2X, 3Y), (C: 0X, 9Y). According to this production possibilities data, it can be concluded that:
(1) resources of this country are homogeneous.
(2) the combination of 3 units of good X and 9 units of good Y is attainable.
(3) to achieve the combination of 3 units of good X and 9 units of good Y would not require to employ all its resources.
(4) the opportunity cost of producing good X increases as more units of good Y are produced.
(5) the opportunity cost of producing good X decreases as more units of goods Y are produced.
Correct Answer:
(1)
Answer Explanation:
The opportunity cost is constant: sacrificing 1 unit of Good X always yields exactly 3 units of Good Y. A constant opportunity cost (linear PPC) indicates that the resources are perfectly adaptable or homogeneous.
Topic: PPC Year: 2023
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