On a bowed-out production possibilities frontier showing possible output levels of Good A and good B,the opportunity cost of producing the first 10 units of Good A will usually be:
A)the same as the opportunity cost of producing the next 10 units of Good A.
B)lower than the opportunity cost of producing the next 10 units of Good A.
C)greater than the opportunity cost of making the next 10 units of Good A.
D)10 units of Good A.
E)10 units of Good B.

Question

Quizplus · Accepted Answer

The bowed-out shape of the production possibilities frontier (PPF) indicates increasing opportunity costs. As more of Good A is produced, the opportunity cost (in terms of foregone production of Good B) increases. Therefore, the opportunity cost of the first 10 units of Good A is lower than the opportunity cost of producing the next 10 units.

On a Bowed-Out Production Possibilities Frontier Showing Possible Output Levels