Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

تمرين 5

Consider the production possibility frontier shown in Figure:
1. Why is this curve called a "frontier"?
2. This curve has a "concave" shape. Would the opportunity cost of clothing production increase if the shape of the curve were convex instead?
Figure Production Possibility Frontier
The production possibility frontier shows the different combinations of two goods that can be produced from a fixed amount of scarce resources. It also shows the opportunity cost of producing more of one good as the quantity of the other good that cannot then be produced. The opportunity cost at two different levels of production of a good can be seen by comparing points A and B. Inefficiency is shown by comparing points B and C.