If a country has a bowed out (concave to the origin)production possibility frontier,then production is said to be subject to
A)constant opportunity costs.
B)decreasing opportunity costs.
C)first increasing and then decreasing opportunity costs.
D)increasing opportunity costs.

Question

Quizplus · Accepted Answer

A bowed out (concave to the origin) production possibility frontier indicates that the opportunity cost of producing one good increases as we produce more and more of it, i.e. there are increasing opportunity costs. As the shape of the PPF is concave to the origin, most of the resources of the economy are specialized, and as we produce more and more of one good, we have to shift more and more resources from the other good to continue producing the same additional unit of the former good. This increases the opportunity cost of producing that additional unit, hence, indicating increasing opportunity costs.

If a Country Has a Bowed Out (Concave to the Origin)production