If the marginal (additional) opportunity cost is a constant, then the PPC would be a ______

a) Convex. b) Straight line. c) Backward bending. d) Concave.

Your Answer

. A.Straight Line.
Because ratio will be 1:1at every stage. The shape of the curve depends on the assumptions made about the opportunity costs. It may be assumed that opportunity cost is constant. In this case the amount of G given up to allow additional production of D is the same regardless of the amount of G and D being produced. In contrast, it may be assumed that the opportunity cost is one of increasing cost; this means that every time an additional unit of D is produced, ever increasing amount of G must be given up in order to provide the resources for expanding D’s output.

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