1. Specialization and production possibilities Suppose the Netherlands 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 the Netherlands's production possibilities frontier (PPF) should reflect the fact that as the Netherlands produces more scooters and fewer bikes, the opportunity cost of producing each additional scooter . The following graphs show two possible PPFs for the Netherlands's economy: a straight-line PPF (PPF1 ) and a bowed-out PPF (PPF2 ). Graph 1 BIKES SCOOTERS PPF 1 Graph 2 BIKES SCOOTERS PPF 2 Based on the previous description, the trade-off the Netherlands faces between producing scooters and bikes is best represented by .

Suppose the Netherlands produces only blkes and scooters. The resources that are used in the productlon of these two goods are not specialized-that Is, the same set of resources is equally effectlve at producing both scooters and blkes. The shape of the Netherlands's production possibilities frontier (PPF) should reflect the fact that as the Netherlands produces more scooters and fewer bikes, the opportunity cost of producing each additional scooter The following graphs show two possible PPFs for the Netherlands's economy: a straight-line PPF (PPF1) and a bowed-out PPF ( PPF2 ). Based on the previous description, the trade-off the Netherlands faces between producing scooters and bikes is best represented by