Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 3 - Part I - Interdependence and the Gains from Trade - Questions for Review - Page 59: 1

Answer

The only condition when a production possibility frontier curve is not bowed outward is when there is constant opportunity cost. In this case, the curve would be linear.

Work Step by Step

This tests knowledge of Production Possibility Frontiers (PPFs) and their generic shape. To truly understand why it can be linear is to understand what causes a constant opportunity cost and this is caused when a firm gives of an object to produce an object of very similar materials. For instance if the firm gave up a pizza to produce a calzone or a cupcake to produce a muffin because the inputs are similar the opportunity costs will be constant.
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