A. An Opportunity Set and a Production Possibilities Frontier
Explanation

Panel (a) shows an individual opportunity set, a budget constraint. Given fixed income and prices, a consumer can afford any combination of Good 1 and Good 2 on or below this line. The trade-off is linear because prices are constant: each additional unit of Good 1 always costs the same amount of Good 2 foregone. The slope equals the price ratio.

Panel (b) shows a social production possibilities frontier. When an entire economy allocates resources between Good 1 and Good 2, the trade-off is typically not constant. The PPF bows outward because of increasing opportunity costs: as society produces more of one good, it must pull resources that are progressively less suited to that use.

The contrast is fundamental. An individual takes market prices as given, so their constraint is a straight line. Society, however, determines the overall allocation, and the concavity of the PPF reflects the heterogeneity of resources, since not all workers, land, or capital are equally productive in every use.

Opportunity Cost Comparison
Individual
OC of 1 unit Good 1
OC of 1 unit Good 2
Slope
\( P_1 \cdot X_1 + P_2 \cdot X_2 = M \)
Social PPF
ShapeConcave (bowed out)
OC typeIncreasing
\( \left(\frac{G_2}{G_{2,max}}\right)^n + \left(\frac{G_1}{G_{1,max}}\right)^n = 1 \)
Legend
Individual budget constraint (linear)
Social PPF (concave)
Note: The axes are swapped between the two panels. The individual graph has Good 1 on X and Good 2 on Y, while the social graph has Good 2 on X and Good 1 on Y, matching the standard textbook presentation.