Suppose Poland produces only camcorders and trucks The resou

Suppose Poland produces only camcorders and trucks. The resources that are used in the production of these two goods are specialized-that is, some inputs are more suitable for producing camcorders than for producing trucks, whereas others are more suitable for producing trucks than camcorders The shape of Poland\'s production possibilities frontier (PPF) should reflect the fact that as Poland produces more trucks and fewer camcorders, the opportunity cost of producing each additional truck The following graphs show two possible PPFs for Poland\'s economy: a straight-line PPF (PPF1 and a bowed-out PPF (PPF2) Graph 1 Graph 2 PPF2 PPF. CO CO TRUCKS TRUCKS

Solution

SOLUTION:

The shape of Poland\'s production possibilities frontier (PPF) should reflect the fact that as Poland produces more trucks and fewer cars, the opportunity cost of producing each additional truck will remain constant

Based on the previous description, the trade-off Poland faces between producing trucks and camcorders is best represented by PPF2

On graphs 1 and 2, point A depicts a combination of camcorders and trucks that lies in the unattainable region, and point B depicts a combination of camcorders and trucks that lies in the attainable condition

Explanation:

--The shape of the PPF (linear) indicates that the opportunity cost remains constant.

--PPF2. The resource cannot be substituted, thus production function is linearly homogenous

--On PPF goods and resources that can be produced by an economy plotted on the production possibilities curve are considered as technically efficient, while the goods and resources that are lying beneath the curve signifies inefficiency