The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4 Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good
B)the scarcity of resources in the economy
C)the constant opportunity cost of producing more of either good
D)the unfair distribution of resources in the economy
E)the increasing opportunity cost of producing more of either good

Question

The diagram below shows two production possibilities boundaries for Country X.  FIGURE 1-4 Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good 
B)the scarcity of resources in the economy 
C)the constant opportunity cost of producing more of either good 
D)the unfair distribution of resources in the economy 
E)the increasing opportunity cost of producing more of either good

Quizplus · Accepted Answer

The concave shape of the production possibilities boundary shows increasing opportunity cost of producing more of either good. As more of a good is produced, resources less well suited for producing that good are used, causing the opportunity cost to increase.

The Diagram Below Shows Two Production Possibilities Boundaries for Country