Chapter 3, Problem 6MCQ

To determine

The question requires us to determine when the production possibilities curve will be straight.

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 a straight and downward sloping line.

Thus, when the production possibilities curve is a straight line, the opportunity cost remains the same.

Option “d” is correct.