A society can produce two goods: bread and biscuits. The society's production possibility curve is negatively sloped and "bowed outward" from the origin. As this society moves down its production possibility frontier and produces more and more units of biscuits, the opportunity cost of producing biscuits:

Question

Quizplus · Accepted Answer

The production possibility curve being "bowed outward" indicates increasing opportunity costs. As more biscuits are produced, resources less suited for biscuit production are used, increasing the opportunity cost.

A Society Can Produce Two Goods: Bread and Biscuits