Refer to the information provided in Figure 2.3 below to answer the question(s) that follow. Figure 2.3
-A society can produce two goods: donuts and beer. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves up its production possibility frontier, producing more and more units of donuts, the opportunity cost of producing beer
A) decreases.
B) remains constant.
C) increases.
D) could decrease or increase depending on the technology.

Question

Refer to the information provided in Figure 2.3 below to answer the question(s) that follow.  Figure 2.3
-A society can produce two goods: donuts and beer. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves up its production possibility frontier, producing more and more units of donuts, the opportunity cost of producing beer
A) decreases. 
B) remains constant. 
C) increases. 
D) could decrease or increase depending on the technology.

Quizplus · Accepted Answer

The "bowed outward" shape of the production possibility frontier indicates increasing opportunity costs. As more donuts are produced, the resources used to produce them are increasingly better suited for beer production, making the opportunity cost of producing additional units of beer higher.

Refer to the Information Provided in Figure 2