Economists believe that production possibilities frontiers are often bowed because

Question

Quizplus · Accepted Answer

Production possibilities frontiers are bowed because resources are not completely adaptable. This means that an increase in the production of one good requires sacrificing the production of another good. The more resources are shifted towards the production of one good, the less productive they become in producing other goods. This creates a diminishing marginal rate of transformation and leads to the bowed shape of the production possibilities frontier. The other choices are incorrect because trade-offs do not inevitably create unemployment, opportunity costs may vary along the production possibility curve, and improvements in technology may shift the entire production possibilities frontier outward, but they do not affect its shape.

Economists Believe That Production Possibilities Frontiers Are Often Bowed Because