The typical production possibilities curve is:
A)an upward sloping line which is concave to the origin.
B)a downward sloping line which is convex to the origin.
C)a downward sloping line which is concave to the origin.
D)a straight upward sloping line.

Question

Quizplus · Accepted Answer

The typical production possibilities curve is a downward sloping line which is concave to the origin. This is because as we produce more of one good, we have to give up increasing amounts of the other good, leading to diminishing marginal returns. This results in a curve that is concave to the origin, indicating that the opportunity cost of producing one good in terms of the other good increases as we produce more of that good.

The Typical Production Possibilities Curve Is