If a Production Possibilities Frontier (PPF)is Concave Outward, It Follows

question 57

Multiple Choice

If a production possibilities frontier (PPF) is concave outward, it follows that

• A)opportunity costs are constant between two goods.
• B)the opportunity cost (of producing the good on the horizontal axis)rises as more of the good is produced.
• C)the opportunity cost (of producing the good on the horizontal axis)falls as more of the good is produced.
• D)the opportunity cost (of producing the good on the horizontal axis)first rises and then falls as more of the good is produced.

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Definitions:

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Mutually Exclusive Projects

Investment opportunities where the acceptance of one project requires the rejection of another.

Cost of Capital

The desired return a corporation aims for in its investment activities to retain its market capitalization and lure in investments.