Assume that two products are being produced: benches and chairs. Create a table that illustrates constant opportunity costs in the production of these two goods. Draw a production possibilities frontier (PPF) based on the data in your table and explain the condition necessary for a PPF to exhibit constant opportunity costs.

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Assume that two products are being produced: benches and chairs.  Create a table that illustrates constant opportunity costs in the production of these two goods.  Draw a production possibilities frontier (PPF) based on the data in your table and explain the condition necessary for a PPF to exhibit constant opportunity costs.


ANS:
The following table illustrates constant opportunity costs:

Benches Chairs
0 160
10 120
20 80
30 40
40 0

The PPF associated with this table would be a downward-sloping straight line with one axis labeled “Benches” and the other axis labeled “Chairs”.  The opportunity cost in this example is a constant rate of 4 chairs forfeited for every one bench produced.  In order for a PPF to exhibit constant opportunity costs, the resources used to produce the products must be equally well-suited to the production of both products.

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