Refer to the above diagram.This production possibilities curve is:
A)convex to the origin because opportunity costs are constant.
B)linear because opportunity costs are constant.
C)concave to the origin because of increasing opportunity costs.
D)convex to the origin because of increasing opportunity costs.

Question

Refer to the above diagram.This production possibilities curve is:
A)convex to the origin because opportunity costs are constant. 
B)linear because opportunity costs are constant. 
C)concave to the origin because of increasing opportunity costs. 
D)convex to the origin because of increasing opportunity costs.

Quizplus · Accepted Answer

The concave shape of the production possibilities curve indicates increasing opportunity costs. As more and more of one good is produced, the opportunity cost increases, meaning that more and more of the other good must be given up. Therefore, the most efficient choice would be one that utilizes a balance between the two goods, as producing too much of one would become increasingly costly.

Refer to the Above Diagram