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

Exercise 20

The Production Possibility Frontier (PPF) shown in Figure 1.1 has a "concave" shape (you can remember that this shape is called "concave" because it resembles part of the entrance to a cave). Explain in words why this shape is consistent with the concept of diminishing returns to increasing clothing production-that is, describe why the opportunity cost of producing more unit of clothing increases as more is produced. How would the PPF look if there were no diminishing returns to clothing production? How might the PPF look if clothing production experienced "increasing returns" because bigger weaving machines could be used as clothing production expands?