A Production Possibilities Frontier Is A Straight Line When. Increasing the production of one good by x units entails a constant opportunity cost in terms of the other good. Sep 24 2015 Microeconomics Basic Economic Concepts Productionpossibility frontier.
This means the opportunity cost is also CONSTANT. Aug 23 2019 If the production possibility frontier is straight it means that the rate of substitution between the two items in question is constant or the same. Consequently the resources saved by producing one less unit of food are just sufficient to allow the economy to produce the same added amount of clothes.
There are two major differences between a budget constraint and a production possibilities frontier.
In contrast the PPF has a curved shape because of the law of the diminishing returns. A movement along the curve represents a transfer of labor resources out of one industry and into another such that all labor remains employed. Get the detailed answer. View Chapter 2 -Production Possibilities Frontier Framework1 1pdf from ECON 20 at University of Central Florida.
