resources are equally productive in both goods. As the law says, as you increase the production of one good, the opportunity cost to produce the additional good increases. BANK SUPERVISION A straight line PPF illustrates constant opportunity costs. RESEARCH & DATA One good can only be produced by diverting resources from other goods, and so by producing less of them. Whether you realize it or not, the economy has a frontier—it has an outer limit of economic production. But, opportunity cost usually will vary depending on the start and end points. At this point, if Econ Isle produces 6 gadgets, it can produce only 4 widgets, so it loses the opportunity to produce 4 gadgets. As the law says, as you increase the production of one good, the opportunity cost to produce the additional good increases.If Econ Isle transitions from widget production to gadget production, it must give up an increasing number of widgets to produce the same number of gadgets. If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. A production possibilities frontier that is a straight line is the result of: constant opportunity costs. Opportunity cost is measured in the number of units of the second good forgone for one or more units of the first good. The marginal opportunity costs of guns in terms of butter is simply the reciprocal of the marginal opportunity cost of butter in terms of guns. However, a straight line doesn't best reflect how the real economy uses resources to produce goods.

For example, many Econ Isle workers are likely very productive gadget makers. In other words, the opportunity cost of producing 2 widgets is now 4 gadgets.Finally, increasing by another 2, Econ Isle can produce 0 gadgets and 6 widgets. FROM THE PRESIDENT Our final lesson focuses on the shape of the frontier line. What is the opportunity cost of her typing the legal brief? A production possibilities frontier that is a straight line shows a a truer from ECON 201 at Miami University COMMUNITY DEVELOPMENT In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). ... -A bow-shaped PPF illustrates the concept of increasing opportunity cost. Remains constant when moving along the frontier. BLOGS & PUBLICATIONS As the economy transitions from gadgets to widgets, the gadget workers best suited to widget production would transition first, then the workers less suited, and finally the workers not at all well suited to widget production.Here's where the curved frontier line comes in.

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