The bowed-outward shape of a PPF
A) is due to capital accumulation.
B) reflects the unequal application of technology in production.
C) illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis.
D) is due to the existence of increasing opportunity cost.

Question

Quizplus · Accepted Answer

The bowed-outward shape of a production possibilities frontier (PPF) is due to the principle of increasing opportunity costs, which states that as production of one good increases, the opportunity cost of producing an additional unit of that good increases, assuming the efficient use of resources. This shape reflects the reality that resources are not equally efficient in all uses, so reallocating resources to different productions involves increasing costs.

The Bowed-Outward Shape of a PPF