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Question
Assume that a PPF for butter and guns is drawn so that it is a straight line. It means ______.
Options
Less and less units of butter are sacrificed to gain an additional unit of gun
More and more units of butter are sacrificed to gain an additional unit of gun
Same units of butter are sacrificed to gain an additional unit of gun
None of these
MCQ
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Solution
Assume that a PPF for butter and guns is drawn so that it is a straight line. It means same units of butter are sacrificed to gain an additional unit of gun.
Explanation:
A straight-line PPF indicates a constant MRT, so the same units of butter are sacrificed for every additional gun. Decreasing MRT gives a convex PPF, and increasing MRT gives a concave PPF.
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