If a Production Possibilities Frontier Is a Straight Line, Then

question 23

Multiple Choice

If a production possibilities frontier is a straight line, then production occurs under conditions of

• A) increasing opportunity costs.
• B) constant opportunity costs.
• C) decreasing opportunity costs.
• D) infinite opportunity costs.
• E) uncertain opportunity costs.

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Definitions:

Marginal Costs

The uplift in total financial outlay required for the making of another unit of a product or service.

Cournot Duopolists

Firms in a market where only two producers exist and compete under the Cournot assumption, where each firm decides its production level assuming the output of its competitor is fixed.

Demand for Wine

The total quantity of wine that consumers are willing and able to purchase at various prices within a specific time period.

Imports

Goods and services purchased from other countries for domestic consumption, often contrasted with exports.