The Endpoints of an Economy's Production Possibilities Frontier (PPF)for Goods

question 34

Multiple Choice

The endpoints of an economy's production possibilities frontier (PPF) for goods X and Y are: (2,000X,0Y) and (0X,500Y) .Furthermore,the opportunity cost between these two goods is always constant.Which of the following combinations of the two goods,X and Y,lies on the economy's PPF?

• A) 400 units of X and 200 units of Y
• B) 600 units of X and 250 units of Y
• C) 400 units of X and 150 units of Y
• D) 1,000 units of X and 250 units of Y
• E) 300 units of X and 150 units of Y

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Definitions:

Fixed Cost

Costs that remain constant in total regardless of changes in the level of activity or volume of production.