Question

1. Specialization and production possibilities Suppose Sweden produces only smartphones and tablets. The resources that are used in the production of these two goods are not specialized that is, the same set of resources is equally useful in producing both tablets and smartphones. The shape of Sweden's production possibilities frontier (PPF) should reflect the fact that as Sweden produces more tablets and fewer smartphones, the opportunity cost of producing each additional tablet The following graphs show two possible PPFs for Sweden's economy: a straight-line PPF (PPF1) and a bowed-out PPF (PPF2). Graph 1 Graph 2 PPF2 PPF SMARTPHONES SMARTPHONES TABLETS TABLETS

increase, decrease or remain constant *

Based on the previous description, the trade-off Sweden faces between producing tablets and smartphones is best represented by Graph 1 or Graph 2 .

Answer 1

Since the set of resources is equally useful, the opportunity cost of producing each additional tablet remains constant

Based on the previous description, the trade-off Sweden faces between producing tablets and smartphones is best represented by Graph 1