Suppose you are studying a production possibilities frontier (PPF)that has a bowed-out shape relative to the origin.What causes this shape?
A) economic growth
B) the law of increasing relative cost
C) absolute advantage
D) normative economics
E) more resources

Question

Quizplus · Accepted Answer

The bowed-out shape of a PPF is caused by the law of increasing relative cost, which states that as an economy switches from producing one good to another, the opportunity cost of producing the second good increases. This results in a bowed-out shape of the PPF, as the slope becomes steeper towards the edges of the curve.

Suppose You Are Studying a Production Possibilities Frontier (PPF)that Has