When there are diminishing marginal returns to factors
Of production, the PPF is:
A)a negatively sloped straight line.
B)bowed out from the origin.
C)caved in toward the origin.
D)a positively sloped straight line.

Question

Quizplus · Accepted Answer

When there are diminishing marginal returns to factors of production, the PPF is bowed out from the origin. This means that as we produce more of one good, we have to give up increasing amounts of the other good. This is because resources are not equally efficient in producing both goods. Therefore, the PPF is not a straight line but rather a curve.

When There Are Diminishing Marginal Returns to Factors