If a production possibilities frontier is bowed out (i.e., concave) in appearance, production occurs under conditions of
A) constant opportunity costs.
B) increasing opportunity costs.
C) decreasing opportunity costs.
D) zero opportunity costs.

Question

Quizplus · Accepted Answer

When the production possibilities frontier is bowed out, it indicates increasing opportunity costs. This means that as an economy produces more of one good, the opportunity cost of producing an additional unit of that good increases, as resources must be increasingly shifted away from the production of other goods. This results in a bowed-out or concave shape of the PPF.

If a Production Possibilities Frontier Is Bowed Out (I