Figure 2.1. Production Possibilities Frontier

question 17

Multiple Choice

Figure 2.1. Production Possibilities Frontier
-Refer to Figure 2.1.If the relative cost of steel were to rise, then the production possibilities frontier would

• A) become steeper.
• B) become flatter.
• C) shift inward in a parallel manner.
• D) shift outward in a parallel manner.

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Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service at a lower cost per unit than the competition.

Orange Production

The production process of growing and harvesting oranges, primarily for consumption as fruit or for juice production.

Opportunity Cost

The value of the next best alternative foregone as a result of making a decision.

Tractor

A type of heavy vehicle used mainly in farming to pull machinery and trailers and for plowing.