A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are
A) better suited for the production of some goods than others.
B) used efficiently.
C) relatively cheap at low levels of output.
D) used to produce consumption goods.

Question

Quizplus · Accepted Answer

Most resources are not equally efficient in producing all goods, which means that the opportunity cost of producing one good in terms of the other varies. This leads to a bowed-out PPF, which reflects increasing opportunity costs as we move from one end of the curve to the other. A downward-sloping straight line PPF would imply constant opportunity costs and a situation where resources are equally efficient in producing both goods, which is unlikely in the real world. Choices B, C, and D are not relevant to explaining the shape of the PPF.

A PPF Is More Likely to Be a Downward-Sloping Curve