The following table illustrates four points on a countrys pr

The following table illustrates four points on a country’s production possibilities frontier.

Based on the table, the country has constant opportunity cost of production:

True or False?

Solution

Yes, the country has constant opportunity cost of production. This is because, opportunity cost remains constant, as the country increases the quantity of good X. Here, if quantity of X is increased from 0 to 12(i.e. by 12 units) , then the country lose (15-10)= 5 units of good Y. Again, if quantity of good X is increased from 12 to 24(i.e. by 12 units again) then the country will loose (10-5)= 5 units of good Y again. Thus the opportunity cost is constant and the PPC is linear for the country.

Answer- True