Chapter 1R, Problem 24MCQ

To determine

The question requires us to determine the impact of constant opportunity cost on the production possibilities curve when the country acquires more resources.

Explanation of Solution

The production possibility model with bowed-out and bowed-in downward sloping curve for a firm indicates that the firm is producing the combinations of two goods and such PPC will have different opportunity costs at a different point on the curve, while the PPC with constant opportunity cost will be straight and downward sloping.

When Sneedleham acquires more resources the PPC will shift outward with no change in slope because the opportunity cost remains the same for producing each good.

Thus, the production possibilities curve shifts outward with no change in slope when a person acquires more resources but the opportunity cost remains the same.

Option “e” is correct.

Economics Concept Introduction

The production possibility curve (PPC) represents the all possible combination of two goods that can be produced by using the given resources in an economy (or firm).