Refer to the diagram below. The concave shape of each production possibilities curve indicates that:
A) resources are perfectly substitutable.
B) wants are virtually unlimited.
C) prices are constant.
D) resources are not equally suited for alternative uses.

Question

Refer to the diagram below. The concave shape of each production possibilities curve indicates that: 
A) resources are perfectly substitutable. 
B) wants are virtually unlimited. 
C) prices are constant. 
D) resources are not equally suited for alternative uses.

Quizplus · Accepted Answer

The concave shape of each production possibilities curve indicates that resources are not equally suited for alternative uses. This means that some resources are better suited for producing some goods than others, causing a trade-off between the production of different goods. As more of one good is produced, increasing amounts of the other good must be given up. This is known as the law of increasing opportunity cost.

Refer to the Diagram Below