The shape of the United Kingdom\'s production possibilities frontier (PPF) shoul

Question

The shape of the United Kingdom's production possibilities frontier (PPF) should reflect the fact that as the United Kingdom produces more trucks and fewer cars, the opportunity cost of producing each additional truck The following graphs show two possible PPFs for the United Kingdom's economy: a straight-line PPF (PPF1) and a bowed-out PPF (PPF2). Graph 1 Graph 2 PPF PPF TRUCKS TRUCKS Based on the previous description, the trade-off the United Kingdom faces between producing trucks and cars is best represented by

Explanation / Answer

A Straight Line Production Possiblity Frontier has a Constant Opportunity Cost. While in case of Bowed Out PPF the Opportunity Cost Increases.

According to straight line graph as soon as we produce more trucks the output of car reduces in the same fixed proportion. Since the PPF1 has constanst opportunity cost.

In case of PPF2 initially the Opportunity cost of Truck is less units of car but as we move down the PPF2 the opportunity cost of truck increases. And at certain point for less unit of truck output we have to sacrifice more unit of Cars.

Therefore, the opportunity cost of additional truck Constant.

The trade off UK faces faces between producing trucks and cars is best represented by Graph 1.

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