Refer to the above diagram.This production possibilities curve is:
A)convex to the origin because opportunity costs are constant.
B)linear because opportunity costs are constant.
C)concave to the origin because of increasing opportunity costs.
D)convex to the origin because of increasing opportunity costs.

Question

Refer to the above diagram.This production possibilities curve is:
A)convex to the origin because opportunity costs are constant. 
B)linear because opportunity costs are constant. 
C)concave to the origin because of increasing opportunity costs. 
D)convex to the origin because of increasing opportunity costs.

Quizplus · Accepted Answer

The production possibilities curve is concave to the origin, indicating increasing opportunity costs. As more and more of one good is produced, an increasing amount of the other good must be given up, resulting in higher opportunity costs. Therefore, the economy should produce along the curve where resources are most efficiently allocated, which in this case is at point B.

Refer to the Above Diagram