File Edit View History Bookmarks Window Help MINDTAP mework (Ch 03) ack to Assig

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File Edit View History Bookmarks Window Help MINDTAP mework (Ch 03) ack to Assignment ttempts: Keep the Highest: 0/2 1. Specialization and production possibilities Suppose Russia produces only tablets and smartphones. The resources that are used in the production of these two goods are not specialized-that is, the same set of resources is equalily useful in producing both smartphones and tablets. The shape of Russia's production possibilties frontier (PPF) Should refiect the fact that as Russia produces more smartphones and fewer tablets, the opportunity cost of producing each additional smartphone-?decreases--x Close Explanation a Recall that the same set of resources is equally useful in producing goth smartphones and tabiets. This means that if Russia decides to produce moru tablets ard fewer smartphones, the reorces that it uses to produce the additional tablets be as well suited to the production of tabiets as the resources already being used in tablet production. Therefore, the opportunity cost of producing each additional tablet remains constant as more tablets are produced The folilowing graphs show two possible PPFs for Russia's economy: a straight-ine PPF (PPF1) and a bowed -out PPF UPPF:) Graph 1

Explanation / Answer

"Increases"

Opportunity cost means as we go on producing more of one good, we have to sacrifice more and more of the other good to free up enough resources for the production. For example, we have to give up more and more tablet if we go on producing more smartphones. this is called increasing opportunity cost (and opportunity cost will never decrease as per the law of diminishing return.)

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