A country's production possibilities curve is concave to the origin (i.e. ,bowed out from the origin)because
A) of the principle of scarcity.
B) the production of one good is expanded by first employing those resources with an absolute advantage.
C) the production of one good is expanded by first employing those resources with the lowest opportunity cost.
D) there is a trade off that requires a decrease in the production of one good in order to increase the production of the other good.
E) of the principle of absolute advantage.

Question

Quizplus · Accepted Answer

The production possibilities curve is concave to the origin because of the principle of increasing opportunity cost. As a country produces more of a good, it must give up increasing amounts of other goods to do so. Resources are not all equally efficient in producing different goods, so as a country tries to produce more of a good, it must use resources that become progressively less suited for that particular task, resulting in a higher opportunity cost. This principle leads to a bowed out or concave-shaped production possibilities curve. Choice C correctly identifies this principle.

A Country's Production Possibilities Curve Is Concave to the Origin