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1. Specialization and production possibilities Suppose Bulgaria produces only bikes and scooters. The resources that are used in the production of these two goods are
1. Specialization and production possibilities Suppose Bulgaria produces only bikes and scooters. The resources that are used in the production of these two goods are not specializedthat is, the same set of resources is equally effective at producing both scooters and bikes. The shape of Bulgaria's production possibilities frontier (PPF) should reflect the fact that as Bulgaria produces more scooters and fewer bikes, the opportunity cost of producing each additional scooter . The following graphs show two possible PPFs for Bulgaria's economy: a straight-line PPF (PPF1 ) and a bowed-out PPF (PPF2 ). A panel labeled Graph 1 shows a P P F for Bulgaria with bikes on the vertical axis and scooters on the horizontal axis. Graph 1 plots a straight-line P P F labeled P P F 1. Graph 1 BIKES SCOOTERS PPF 1 A panel labeled Graph 2 shows a P P F for Bulgaria with bikes on the vertical axis and scooters on the horizontal axis. Graph 2 plots a concave, bowed-out P P F labeled P P F 2. Graph 2 BIKES SCOOTERS PPF 2 Based on the previous description, the trade-off Bulgaria faces between producing scooters and bikes is best represented by
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