Multiple Choice
Which of the following scenarios best illustrates constant returns to scale on a production possibilities frontier (PPF)?
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2. Introductory Economic Models
Production Possibilities Frontier (PPF) - Introduction and Productive Efficiency
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The feasible region in a Production Possibilities Frontier (PPF) diagram is consistent with which one of the following constraints?
A
Unlimited production capacity
B
Constant opportunity cost for all goods
C
Limited resources and technology
D
Perfectly elastic supply of all inputs
Verified step by step guidance1
Understand that a Production Possibilities Frontier (PPF) represents the maximum possible output combinations of two goods that an economy can produce given its resources and technology.
Recognize that the feasible region on a PPF diagram includes all points on or inside the curve, indicating production levels that are attainable with the available resources and technology.
Identify that the PPF is constrained by limited resources and technology, which restrict the economy from producing beyond the frontier.
Note that unlimited production capacity would imply no constraints, which contradicts the concept of a PPF showing trade-offs due to scarcity.
Conclude that the feasible region is consistent with the constraint of limited resources and technology, as this limitation shapes the boundary of the PPF.
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