A PPF bows outward because
A) consumers prefer about equal amounts of the different goods.
B) resources are used inefficiently.
C) not all resources are equally productive in all activities.
D) entrepreneurial talent is more abundant than human capital.

Question

Quizplus · Accepted Answer

PPF bows outward because not all resources are equally productive in all activities. This means some resources are better suited for producing one good over another, resulting in a trade-off between producing the two goods. This leads to the PPF being bowed outward instead of being a straight line. A straight-line PPF would indicate that resources are equally productive in all activities.

A PPF Bows Outward Because