Consider a production possibilities boundary that is drawn concave to the origin and shows the possible combinations of military goods and civilian goods that a country can produce.Suppose the country is currently at a point on the boundary.If the production of military goods is increased,the production of civilian goods will necessarily
A)decrease.
B)remain the same.
C)increase.
D)increase at a decreasing rate.
E)increase at a increasing rate.

Question

Quizplus · Accepted Answer

The concave shape of the production possibilities boundary indicates diminishing marginal returns. As the production of military goods increases, the country will have to allocate more and more resources that are better suited for civilian production resulting in a reduction of the production of the civilian goods. Therefore, the answer is A) decrease.

Consider a Production Possibilities Boundary That Is Drawn Concave to the Origin